Question
Lewis and Laurie are married and jointly own a home valued at $345,000. They recently paid off the mortgage on their home. In need of
Lewis and Laurie are married and jointly own a home valued at $345,000. They recently paid off the mortgage on their home. In need of cash for personal purposes unrelated to the home, the couple borrowed money from the local credit union. How much interest may the couple deduct in each of the following alternative situations? (Assume they itemize deductions no matter the amount of interest.) (Leave no answer blank. Enter zero if applicable.)
1) The couple borrows $50,000, and the loan is secured by their home. The couple pays $2,000 interest on the loan during the year, and the couple files a joint return.
2) The couple borrows $19,400 unsecured from the credit union. The couple pays $1,746 interest on the loan during the year, and the couple files a joint return.
3) The couple borrows $150,000, and the loan is secured by their home. The couple pays $5,550 interest on the loan during the year, and the couple files a joint return.
4) The couple borrows $150,000, and the loan is secured by their home. The couple pays $5,550 interest on the loan during the year, and the couple files separate tax returns. Determine the interest deductible by Lewis only.
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