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Facts for Questions 6, 7 & 8. Sam buys a house in 2000 for $75,000. He inherits some money in 2001, and pays off his mortgage loan right away. He continues to live in the house, and it goes up in value to $250,000. Sam decides to take some of his equity out of the house, so in 2021 he gets a mortgage on the house for $200,000, which he invests in the stock market. His stock investments go down in value, and he gets no dividends from the stock. His mortgage-interest expense in 2022 is $12,000.

6. How much mortgage-interest expense (acquisition debt or home-equity debt) can he write-off on Schedule A for 2022?

1. $ 0
2. $ 6,000
3. $ 12,000

7. In March of 2022, Sam decides to sell his home, and he receives net cash of $275,000 from the sale. (After paying off his $200,000 mortgage, he has $75,000 left.) How much gain will Sam have realized on the sale of his home?

a. $ 25,000

b. $ 75,000

c. $ 200,000

d. $ 250,000

e. $ 275,000

8. How much will Sam have to recognize as taxable gain from the sale of his home, on his 2022 tax return?

1. $ 0
2. $ 25,000
3. $ 75,000
4. $200,000
5. $275,000