Jessica purchased a home on January 1, year 1 for $500,000 by making a down payment of $200,000 and financing the remaining $300,000 with a 30-year loan, secured by the residence, at 6 percent. During year 1 and year 2, Jessica made interest-only payments on this loan of $18,000 (each year). On July 1, year 1, when her home was worth $500,000Jessica borrowed an additional $125,000 secured by the home at an interest rate of 8 percent. During year 1, she made interest-only payments on the second loan in the amount of $5,000. During year 2, she made interest only on the second loan in the amount of $10,000. What is the maximum amount of the $28,000 interest expense Jessica paid during year 2 may she deduct as an itemized deduction if she used theproceeds of the second loan to finish the basement in her home and landscape her yard?

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The Answer of Jessica purchased a home on January 1, year 1 for $500,000 by making a down payment of $200,000 and financing the remaining $300,000 with a 30-year loan, secured by the residence, at 6 percent. During year 1 and year 2, Jessica made interest-only payments on this loan of $18,000 (each year). On July 1, year 1, when her home was worth $500,000Jessica borrowed an additional $125,000 secured by the home at an interest rate of 8 percent. During year 1, she made interest-only payments on the second loan in the amount of $5,000. During year 2, she made interest only on the second loan in the amount of $10,000. What is the maximum amount of the $28,000 interest expense Jessica paid during year 2 may she deduct as an itemized deduction if she used theproceeds of the second loan to finish the basement in her home and landscape her yard?

Jessica Purchased a Home on January 1, Year 1 for $500,000