During the current year, Cary and Bill incurred acquisition debt on their residence of $1,300,000 and a home equity loan of $200

Question

3 years ago

6

During the current year, Cary and Bill incurred acquisition debt on their residence of $1,300,000 and a home equity loan of $200

,000. On a joint tax return, what is the amount of their qualified acquisition debt and qualified home equity debt, respectively?

Business

1 answer:

77julia77 [94] · Answer 1 · 2022-03-01T00:33:34+03:00

Answer:

qualified acquisition debt = $750,000

qualified home equity debt = $0

Explanation:

Qualified acquisition debt refers to the debt incurred to purchase or build your home. In this case, Cary and Bill are allowed to itemize the interests paid for up to $750,000 of the acquisition debt ($375,000 if filing separately). This limit was reduced due to the TCJA of 2017, and will remain in place until 2025. After 2025, the limit will return to the normal $1,000,000.

Certain amount of interests on qualified home equity loans will also return in 2025, but currently they are not deductible.