This year, Major Healy paid $40,000 of interest on a mortgage on his home (Major Healy borrowed
Question:
This year, Major Healy paid $40,000 of interest on a mortgage on his home
(Major Healy borrowed $800,000 to buy the residence; $900,000 original purchase price and value at purchase; $1,000,000 current worth), $6,000 of interest on a $120,000 home equity loan on his home (loan proceeds were used to buy antique cars), and $10,000 of interest on a mortgage on his vacation home
(loan of $200,000; home purchased for $500,000). Major Healy’s AGI is
$220,000.
a) How much interest expense can Major Healy deduct as an itemized deduction?
b) Assume the original facts, except that Major Healy’s home had a fair market value of $1,000,000 when he purchased the home and took out the home equity debt, but now the home is worth $500,000. How much interest expense can Major Healy deduct as an itemized deduction?
Step by Step Answer:
McGraw-Hill's Taxation Of Individuals
ISBN: 9781259729027
2017 Edition
Authors: Brian Spilker, Benjamin Ayers, John Robinson, Edmund Outslay, Ronald Worsham, John Barrick, Connie Weaver