Wayne purchases a new home during the year,borrowing $725,000 from Century National Bank to finance the purchase.He also pays $7,250 in points and $4,500 in loan origination fees.During the year he pays interest of $71,000 on the loan.What is Wayne's allowable interest deduction?

Question

Quizplus · Accepted Answer

The allowable interest deduction includes the $71,000 of interest paid on the loan plus any points paid at the time of closing, which in this case is $7,250. Therefore, Wayne's total allowable interest deduction is $71,000 + $7,250 = $78,250, which is option D.

Wayne Purchases a New Home During the Year,borrowing $725,000 from Century