Answered

Get expert insights and reliable answers to your questions on IDNLearn.com. Ask anything and receive comprehensive, well-informed responses from our dedicated team of experts.

Mary purchased a home in 2020 for $200,000. She made a 20-percent down payment and financed the rest with a 15- year loan at six percent. In 2020, she took out a $20,000 home equity loan and used the proceeds to go on a trip around the world. In 2021, her interest payments were $9,600 on her mortgage and $1,400 on her home equity loan. What amount can she deduct in 2021 as an itemized deduction

Sagot :

Anthougoidn

The amount Mary can deduct in 2021 as an itemized deduction is $9,600 because the home equity loan of $20,000 used for the world trip does not qualify as acquisition indebtedness.

Data and Calculations:

Cost of home purchased in 2020 = $200,000

Down payment for the home = $40,000 ($200,000 x 20%)

Mortgage value = $160,000 ($20,000 - $40,000)

Maturity period of mortgage = 15 years

Interest rate = 6%

Interest expense = $9,600 ($160,000 x 6%)

Home equity loan = $20,000

Interest on home equity loan = $1,400

Thus, Mary can only deduct $9,600 as an itemized deduction in 2021.

Learn more: brainly.com/question/14187831

We appreciate your presence here. Keep sharing knowledge and helping others find the answers they need. This community is the perfect place to learn together. IDNLearn.com has the solutions to your questions. Thanks for stopping by, and come back for more insightful information.