On January 1, 2014, Kathy purchased her principal residence for $900,000, borrowing $400,000, secured by her home. She also opened a line of credit secured by the home for $65,000 and used the funds to purchase a Porche. She paid interest of $50,000 on the home loan and $5,000 interest on the line of credit loan.

1. How much interest can Kathy deduct in 2014?
2. How much interest could she deduct if the year was 2019?
3. Assume instead that the above home was a vacation home in 2014 and not Kathys principal residence. She rented the home out for 15 days and did not use the residence for personal use at all. She had rental income and expenses for the year as follows:

Rental Income $3,000

Qualified residence interest $3,000

Property taxes $500

Utilities and maintenance $1500

Depreciation $4,000

What are the tax consequences to Kathy?

d) How would your answer to (c) change if Kathy only rented out her vacation home for 14 days in 2014?