Patricia purchased a home on January 1, 2017 for $1,200,000 by making a down payment of $100,000 and financing the remaining $1,100,000 with a 30-year loan, secured by the residence, at 6 percent. During year 2017 and 2018, Patricia made interest-only payments on the loan of $66,000. What amount of the $66,000 interest expense Patricia paid during 2018 may she deduct as an itemized deduction? (Assume not married filing separately.)

Question

Quizplus · Accepted Answer

For loans occurring before December 16, 2017, interest on up to $1,000,000 of acquisition debt is deductible. In 2018, interest on home equity indebtedness is not deductible. Here all the debt is acquisition indebtedness and she may deduct interest on $1,000,000 of the $1,100,000 debt.

Patricia Purchased a Home on January 1, 2017 for $1,200,000