Question

This year (2020), Major Healy paid $37,000 of interest on a mortgage on his home (he...

This year (2020), Major Healy paid $37,000 of interest on a mortgage on his home (he borrowed $740,000 to buy the residence in 2015; $840,000 original purchase price and value at purchase), $5,500 of interest on a $110,000 home equity loan on his home (loan proceeds were used to buy antique cars), and $9,500 of interest on a mortgage on his vacation home (borrowed $190,000 to purchase the home in 2010; home purchased for $475,000). Major Healy’s AGI is $220,000. How much interest expense can Major Healy deduct as an itemized deduction?

Homework Answers

Answer #1

In the US Tax Code, individuals that established their home loans before December 15, 2017, can deduct their mortgage interest on their home loans if the value of the home loans were under $1 million dollars. After December 15, 2017, that limit has been reduced to $750,000.

Home loans before Dec 15 2017- interest deduction allowed if loan under $ 1 million dollars

Home loans after Dec 15 2017- interest deduction allowed if loan under $ 7,50,000 dollars

Therefore total interest deduction for Major Healy;

on his home in 2015; $37000;

For Home equity loan , loan proceeds were used to buy antique cars, hence no deduction;

interest on a mortgage on his vacation home; $9500

Hence, total interest deduction is $ 46,500

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
This year, Major Healy paid $40,000 of interest on a mortgage on his home (he borrowed...
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...
This year, Major Healy paid $33,750 of interest on a mortgage on his home (he borrowed...
This year, Major Healy paid $33,750 of interest on a mortgage on his home (he borrowed $675,000 to buy the residence in 2015; $775,000 original purchase price and value at purchase), $5,250 of interest on a $105,000 home equity loan on his home (loan proceeds were used to buy antique cars), and $6,250 of interest on a mortgage on his vacation home (borrowed $125,000 to purchase the home in 2010; home purchased for $312,500). Major Healy’s AGI is $220,000. How...
This year, Major Healy paid $33,250 of interest on a mortgage on his home (he borrowed...
This year, Major Healy paid $33,250 of interest on a mortgage on his home (he borrowed $665,000 to buy the residence in 2015; $765,000 original purchase price and value at purchase), $5,000 of interest on a $100,000 home equity loan on his home (loan proceeds were used to buy antique cars), and $5,750 of interest on a mortgage on his vacation home (borrowed $115,000 to purchase the home in 2010; home purchased for $287,500). Major Healy’s AGI is $220,000. How...
This year, Benjamin Hassell paid $16,200 of interest on a mortgage on his home (Benjamin borrowed...
This year, Benjamin Hassell paid $16,200 of interest on a mortgage on his home (Benjamin borrowed $540,000 in 2015 to buy the residence and it is currently worth $864,000), $12,200 on a $152,500 home-equity loan on his home, and $10,350 of interest on a mortgage on his vacation home (loan of $345,000; home purchased for $445,000 in 2016; home is not rented out at any time). How much interest expense can Benjamin deduct as an itemized deduction?
Required information [The following information applies to the questions displayed below.] This year, Randy paid $30,850...
Required information [The following information applies to the questions displayed below.] This year, Randy paid $30,850 of interest on his residence. (Randy borrowed $488,000 to buy his residence, and it is currently worth $538,000.) Randy also paid $3,450 of interest on his car loan and $5,625 of margin interest to his stockbroker (investment interest expense). How much of this interest expense can Randy deduct as an itemized deduction under the following circumstances? a. Randy received $2,960 of interest this year...
gene owns his own home, which he bought several years ago. his original mortgage which was...
gene owns his own home, which he bought several years ago. his original mortgage which was used to buy the house is $150,000, in the current year, he obtains a home equity loan on the house of $90,000. the interest on the original mortgage is $15,000 and on the new loan is $10,000. the fair market value of the house is $325,000. how much of this interest is deductible as qualified residence interest a 0 b $10,000 c $15,000 d...
22. Michael (single) purchased his home on July 1, 2007. On July 1, 2015 he moved...
22. Michael (single) purchased his home on July 1, 2007. On July 1, 2015 he moved out of the home. He rented out the home until July 1, 2016 when he moved back into the home. On July 1, 2017 he sold the home and realized a $305,000 gain. What amount of the gain is Michael allowed to exclude from his 2017 gross income? MULTIPLE CHOICE $0 $225,000 $250,000 $305,000 23. In year 1, Kris purchased a new home for...
1.This year Randy paid $27,000 of interest (Randy borrowed $450,000 to buy his residence, and it...
1.This year Randy paid $27,000 of interest (Randy borrowed $450,000 to buy his residence, and it is currently worth $500,000). Randy also paid $2,500 of interest on his car loan and $4,200 of margin interest to his stockbroker (investment interest expense). Randy received $2,200 of interest this year and no other investment income or expenses. His AGI is $75,000. How much of this interest expense can Randy deduct as an itemized deduction? 2. In addition to cash contributions to charity,...
Patrick purchased a home on January 1, year 2018 for $600,000 by making a down payment...
Patrick purchased a home on January 1, year 2018 for $600,000 by making a down payment of $100,000 and financing the remaining $500,000 with a 30-year loan, secured by the residence, at 6 percent. During 2018, Patrick made interest-only payments on the loan of $30,000. On July 1, 2018, when his home was worth $600,000 Patrick borrowed an additional $75,000 secured by the home at an interest rate of 8 percent. During 2018, he made interest-only payments on this loan...
During 2017, Marvin, divorced since 2014, supports his dependent father who lives in Canada, had the...
During 2017, Marvin, divorced since 2014, supports his dependent father who lives in Canada, had the following transactions: Salary                                                                       $95,000 Bank loan (proceeds used to buy personal auto) 10,000 Alimony paid                                                              12,000 Child support paid (lives with mother)    6,000 Gift from aunt                                                            20,000 Home Mortgage Interest                                             7,400 Property taxes on residence    1,400 Charitable contributions                                               1,000 Prepare and attach an Excel or Word file (name the file "Exam 1 - Problem 4) to compute Marvin’s: AGI Standard deduction or Itemized deduction Personal and dependent...