Joseph and Sandra, married taxpayers, took out a mortgage on their home for $350,000 in 1990.In May of this year, when the home had a fair market value of $450,000 and they owed $250,000 on the mortgage, they took out a home equity loan for $220,000.They used the funds to purchase a single engine airplane to be used for recreational travel purposes.What is the maximum amount of debt on which they can deduct home equity interest?

Question

Quizplus · Accepted Answer

Under the Tax Cuts and Jobs Act (TCJA), taxpayers can only deduct interest on up to $100,000 of home equity debt if the loan is used for purposes other than buying, building, or improving a home. Since Joseph and Sandra used the home equity loan to purchase an airplane for recreational purposes, they can only deduct interest on up to $100,000 of the debt. Therefore, choice B is the correct answer.

Joseph and Sandra, Married Taxpayers, Took Out a Mortgage on Their