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?

Question

Quizplus · Accepted Answer

Only the first $1,000,000 of acquisition debt is considered qualified, so $900,000 of their $1,300,000 acquisition debt is qualified. As for the home equity loan, only $100,000 is considered qualified because the limit is $100,000 or the fair market value of the home minus the amount of acquisition debt, whichever is less. Therefore, their qualified acquisition debt is $900,000 and their qualified home equity debt is $100,000, making choice C the correct answer.

During the Current Year,Cary and Bill Incurred Acquisition Debt on Their