Janet and James purchased their personal residence 15 years ago for $300,000. For the current year, they have an $80,000 first m

Question

3 years ago

10

Janet and James purchased their personal residence 15 years ago for $300,000. For the current year, they have an $80,000 first m

ortgage on their home, on which they paid $5,750 in interest. They also have a home equity loan to pay for the children's college tuition secured by their home with a balance throughout the year of $150,000. They paid interest on the home equity loan of $9,000 for the year.
Required:
Calculate the amount of their deduction for interest paid on qualified residence acquisition debt and qualified home equity debt for the current year.

Business

1 answer:

Semenov [28] · Answer 1 · 2022-10-25T03:29:38+03:00

Answer: $5750 ; $6000

Explanation:

The amount of their deduction for interest paid on qualified residence acquisition debt will be the interest paid on the first mortgage of their home which is: = $5750

The amount of the deduction paid on qualified home equity debt will be calculated as:

= (100000/150000) × 9000

= $6000