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Sergeu [11.5K]
3 years ago
6

Tax Savings. John and Cheryl just borrowed $30,000 on a home equity line of credit. The interest rate for the loan is 6.75% for

the entire year, and they took out the loan on May 1. John and Cheryl are in the 28% tax bracket. What will be their tax savings for the first year ending December 31st
Business
1 answer:
Sauron [17]3 years ago
6 0

Answer:

$378

Explanation:

Interest expenses in current year = Amount of borrowing*Interest rate*8 month/12 months

Interest expenses in current year = $30,000 * 6.75% * 8/12

Interest expenses in current year = $1,350

Tax saving on interest expenses = Interest expenses * Tax rate

Tax saving on interest expenses = $1,350 * 28%

Tax saving on interest expenses = $378

So, their tax savings for the first year ending December 31 will be $378.

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