Robin purchased a home on July 1,year 1 for $300,000.She paid $200,000 down and financed the remaining $100,000.On January 1,year 6 when the outstanding balance of her mortgage was $85,000 and her home was valued at $300,000,she refinanced her home for $250,000.With the $250,000 loan,she paid off the remaining $85,000 balance of her original mortgage,she used $70,000 to substantially improve her home and she used the remaining $95,000 for purposes unrelated to her home.During year 6,Robin made interest only payments of $12,500 on the loan.What amount of the $12,500 interest expense is Robin allowed to deduct in year 6?

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The Answer of Robin purchased a home on July 1,year 1 for $300,000.She paid $200,000 down and financed the remaining $100,000.On January 1,year 6 when the outstanding balance of her mortgage was $85,000 and her home was valued at $300,000,she refinanced her home for $250,000.With the $250,000 loan,she paid off the remaining $85,000 balance of her original mortgage,she used $70,000 to substantially improve her home and she used the remaining $95,000 for purposes unrelated to her home.During year 6,Robin made interest only payments of $12,500 on the loan.What amount of the $12,500 interest expense is Robin allowed to deduct in year 6?

Robin Purchased a Home on July 1,year 1 for $300,000