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During 2019, Harry purchased a house for $300,000.00. He paid $100,000.00 cash and applied for a...

During 2019, Harry purchased a house for $300,000.00. He paid $100,000.00 cash and applied for a mortgage of $200,000.00. He was approved by ABD Bank for the $200,000.00 and used the mortgage proceeds to pay for the balance of the house. What amount is Harry entitled to deduct his income tax return in 2019?

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Answer #1

Home mortgage Interest on Acquisition indebtedness

A taxpayer is allowed to deduct from his/her income tax return interest paid on home mortgage loans as a itemized deduction. The deduction is allowed provided, the home is 1st or 2nd home for the taxpayer and the amount of loan does not exceed $750,000.

Thus in the given case, Harry would be entitled to deduct from his income tax return in 2019, the interest amount payable to ABD bank for the loan of $200,000 if he elects itemized deduction over standard deduction.

Feel free to ask for any clarification, if required. Kindly provide feedback by thumbs up. It would be highly appreciated. Thank You.

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