Leticia purchased a home on July 1, 2018, for $340,000. She paid $306,000 down and financed the remaining $34,000. On January 1, 2020, when the outstanding balance of her mortgage was $25,500 and her home was valued at $510,000, Leticia refinanced her home for $340,000. With the $340,000 loan, she paid off the remaining $25,500 balance of her original mortgage, she used $49,000 to substantially improve her home, and she used the remaining $265,500 for purposes unrelated to her home. During 2022, Leticia made interest-only payments of $25,500 on the loan. What amount of the $25,500 interest expense is Leticia allowed to deduct in year 2022?

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The Answer of Leticia purchased a home on July 1, 2018, for $340,000. She paid $306,000 down and financed the remaining $34,000. On January 1, 2020, when the outstanding balance of her mortgage was $25,500 and her home was valued at $510,000, Leticia refinanced her home for $340,000. With the $340,000 loan, she paid off the remaining $25,500 balance of her original mortgage, she used $49,000 to substantially improve her home, and she used the remaining $265,500 for purposes unrelated to her home. During 2022, Leticia made interest-only payments of $25,500 on the loan. What amount of the $25,500 interest expense is Leticia allowed to deduct in year 2022?

Leticia Purchased a Home on July 1, 2018, for $340,000