Question

This year, major healy paid $ 40,000 of interest on a mortgage on his home (he borrowed $ 800,000 to buy the residence in 2015; $ 900,000 original purchase price and value at purchase), $ 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 (borrowed $ 200,000 to purchase the home in 2010). Major healy's agi is $ 220,000. How much interest expense can major healy deduct as an itemized deduction

Answer 1

Answer:

The nterest expense can major healy deduct as an itemized deduction is $55,000.

Explanation:

total interest expense = interest on mortgage home + interest on mortgage vacation home

                                     = $40,000 + $10,000

                                      = $50,000

total amount of mortgage pf major healy = $800,000 + $200,000

                                                                    = $1,000,000

the acquisition debt does not exceed $1,000,000 so he can deduct $40,000 mortgage interest on his home and $10,000 mortgage interest on his vacation home.

interest on home equity loan = 6,000

interest on home equity load  = [home equity debt limit/home equity load]*interest on home equity load

                                                  = [100000/120000]*6000

                                                  = $5,000

Therefore, The nterest expense can major healy deduct as an itemized deduction is $55,000.