2018 Income Tax Fundamentals

Sally and Jim purchased their personal residence in Santa Barbara 20 years ago for $150,000. h home has a fair market value today of $1,000,000. For the current year, they have a $10,000 first mortgage on their home, on which they paid $1,000 in interest. They also have a home equity loan secured by their home with a balance throughout the year of $110,000. The proceeds of the home equity loan were used to send their two children to college. They paid interest on the home equity loan of $5,500 for the year.

Calculate the amount of their deduction for interest paid:

Qualified residence acquisition debt interest:

Qualified home equity debt interest: