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 up to $1 million of acquisition debt for a mortgage incurred before December 15, 2017. Since their mortgage balance exceeds this limit, they must prorate the interest deduction: ($1,000,000 / $1,430,000) * $93,000 = $65,035.

This Year, Mr