Jacoby purchased a home in 2016 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. He made interest only payments for 2016, 2017, and 2018. In 2018, Jacoby can deduct interest expense on $1,100,000 of the loan principal.

Question

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The maximum amount of debt on which a taxpayer may deduct home mortgage interest is limited to $1,000,000 of acquisition indebtedness for debt incurred before 12/15/2017.

Jacoby Purchased a Home in 2016 for $1,500,000 by Making