Jacoby purchases a home for $1,500,000 by making a $150,000 down payment and by borrowing the remaining $1,350,000 with a loan secured by the home.Jacoby can deduct interest expense on $1,100,000 of the loan principal.The maximum amount of debt on which a taxpayer may deduct qualified residence interest is $1,100,000;$1,000,000 of acquisition indebtedness plus $100,000 of home-equity indebtedness.

Question

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This statement is true as per the given information. Jacoby can only deduct interest expense on $1,100,000 of the loan principal, which is the maximum amount of debt on which a taxpayer may deduct qualified residence interest. This amount includes $1,000,000 of acquisition indebtedness and $100,000 of home-equity indebtedness.

Jacoby Purchases a Home for $1,500,000 by Making a $150,000