Sally and Jim purchased their personal residence in Santa Barbara 20 years ago for $150,000. The home has a fair market value today of $1,000,000. For the current year, they have a $10,000 first mortgage on their home, on which they paid $1,000 in interest. They also have a home equity loan secured by their home with a balance throughout the year of $110,000. The proceeds of the home equity loan were used to send their two children to college. They paid interest on the home equity loan of $11,000 for the year.

Calculate the amount of their deduction for interest paid on qualified residence acquisition debt and qualified home equity debt for 2014.

Qualified residence acquisition debt interest:

Qualified home equity debt interest:

Question

Sally and Jim purchased their personal residence in Santa Barbara 20 years ago for $150,000. The home has a fair market value today of $1,000,000. For the current year, they have a $10,000 first mortgage on their home, on which they paid $1,000 in interest. They also have a home equity loan secured by their home with a balance throughout the year of $110,000. The proceeds of the home equity loan were used to send their two children to college. They paid interest on the home equity loan of $11,000 for the year.
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Calculate the amount of their deduction for interest paid on qualified residence acquisition debt and qualified home equity debt for 2014.
​
Qualified residence acquisition debt interest:
​
Qualified home equity debt interest:

Quizplus · Accepted Answer

The Answer of Sally and Jim purchased their personal residence in Santa Barbara 20 years ago for $150,000. The home has a fair market value today of $1,000,000. For the current year, they have a $10,000 first mortgage on their home, on which they paid $1,000 in interest. They also have a home equity loan secured by their home with a balance throughout the year of $110,000. The proceeds of the home equity loan were used to send their two children to college. They paid interest on the home equity loan of $11,000 for the year.
​
Calculate the amount of their deduction for interest paid on qualified residence acquisition debt and qualified home equity debt for 2014.
​
Qualified residence acquisition debt interest:
​
Qualified home equity debt interest:

Sally and Jim Purchased Their Personal Residence in Santa Barbara