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?