Question

During 2018, Cary and Bill incurred acquisition debt on their residence of $1,300,000. They also borrowed $200,000 on a home equity line to pay college tuitions for their children. On a joint tax return, what is the amount of their qualified acquisition debt?
a. None of the above
b. $1,500,000
c. $750,000
d. $1,000,000
e. $1,300,000

Answer 1

Answer:

The correct answer to the following question is option C) $750,000 .

Explanation:

In 2018, Carry and Bill took a qualified residence loan , where they incurred acquisition debt equal to $13,00,000 for their residence and took $200,000 on a home equity for paying their children's college tuition. As per the IRS, if a qualified residence loan is taken , then it should be secured against the home and loan should used to purchase or make improvement on the house.

The amount that is allowed as deductible for qualified residence loan for joint tax payers is $750,000, earlier this amount was $1 million.