This year,Mr.and Mrs.Franklin paid $93,000 interest on a mortgage incurred in 2008 to build their home in Santa Fe.The average principal balance of the mortgage was $1.43 million.The home has an appraised FMV of only $1.2 million.Compute the Franklins' itemized deduction for their home mortgage interest.

Question

Quizplus · Accepted Answer

The Franklins can only deduct interest on the mortgage up to the fair market value of the home, which is $1.2 million. The deductible interest is calculated as ($1.2 million / $1.43 million) * $93,000 = $65,035.

This Year,Mr