Patricia purchased a home on January 1,2017,for $1,200,000 by making a down payment of $100,000 and financing the remaining $1,100,000 with a loan,secured by the residence,at 6 percent.From 2017 through 2019,Patricia made interest-only payments on the loan each year in the amount of $66,000.What amount of the $66,000 interest expense that Patricia paid during 2019 may she deduct as an itemized deduction? (Assume not married filing separately.)

Question

Quizplus · Accepted Answer

The maximum amount of mortgage debt on which interest can be deducted under the new tax law (TCJA) changed from $1,000,000 to $750,000 for mortgages taken out after December 14, 2017. However, loans taken out before that date are grandfathered in under the old $1,000,000 limit. Since Patricia’s loan was taken out before the new tax law, she can deduct the full $66,000 interest expense paid in 2019 on her itemized deduction.

Patricia Purchased a Home on January 1,2017,for $1,200,000 by Making