Ms. Ruang, a single taxpayer, purchased her principal residence on August 19, 2018 and financed the purchase with a mortgage secured by the residence. In 2018, the average balance of the mortgage was $817,000, and Ms Ruang paid $35,000 of mortgage interest. How much of this interest is an itemized deduction?

Question

Quizplus · Accepted Answer

For mortgages taken out after December 15, 2017, the Tax Cuts and Jobs Act limits the mortgage interest deduction to interest on the first $750,000 of mortgage debt. Since Ms. Ruang's mortgage exceeds this limit, only the interest on $750,000 is deductible. The deductible interest is calculated as ($750,000 / $817,000) * $35,000 = $32,130.

Ms Ruang, a Single Taxpayer, Purchased Her Principal Residence on August