Which of the following statements regarding the home mortgage interest expense deduction is correct?
A)Taxpayers may deduct interest expense on a limited amount of home equity indebtedness, but they may deduct interest expense on an unlimited amount of home acquisition indebtedness.
B)Taxpayers may deduct interest expense on a limited amount of acquisition indebtedness but an unlimited amount of home equity indebtedness.
C)What a bank might call a "home equity loan" the tax laws will call acquisition indebtedness if the loan is secured by the home and the taxpayer uses the loan proceeds to substantially improve the home.
D)None of the choices are correct.

Question

Quizplus · Accepted Answer

The correct statement is that what a bank might call a "home equity loan" the tax laws will call acquisition indebtedness if the loan is secured by the home and the taxpayer uses the loan proceeds to substantially improve the home. The deduction for home mortgage interest expense is limited to interest paid on up to $750,000 of acquisition indebtedness and up to $100,000 of home equity indebtedness if used for purposes other than to buy, build or substantially improve the taxpayer's home.

Which of the Following Statements Regarding the Home Mortgage Interest