Rob, who is single, purchased a personal residence eight years ago for $370,000. He paid a down payment of $74,000 plus closing costs, and took out a mortgage of $296,000 to complete the purchase. The mortgage is secured by the personal residence. In May of the current year, when the residence has a fair market value of $520,000 and Rob owes $220,000 on the mortgage. Rob needs $140,000 in extra cash to purchase a motor home for personal use:

a) If Rob refinances by replacing the existing mortgage with a new mortgage of $360,000, also secured by the personal residence, he will have the needed extra cash. How much of the mortgage interest will be deductible if Rob adopts this approach and pays $14,400 in total interest this year?

b) Alternatively, Rob could leave the existing mortgage in place without any change. Under this approach, he would instead borrow $140,000 on a home equity line of credit. How much of the mortgage interest (on the original $296,000 mortgage) paid this year in the amount of $7,700 would Rob be allowed to deduct? AND how much of the home equity line of credit interest paid this year in the amount of $6,700 would Rob be allowed to deduct?