During 2018, Cary and Bill incurred acquisition debt on their residence of $1,300,000.They also borrowed $200,000 on a home equity line to pay college tuitions for their children.On a joint tax return, what is the amount of their qualified acquisition debt?

Question

Quizplus · Accepted Answer

Only the debt used to acquire, build, or substantially improve a qualified residence is counted as qualified acquisition debt. The $1,300,000 acquisition debt fits this criteria. The $200,000 home equity line does not qualify because it was used to pay for college tuition and not to acquire, build or improve their residence. Therefore the amount of their qualified acquisition debt is $1,300,000.

During 2018, Cary and Bill Incurred Acquisition Debt on Their