Which of the following statements regarding the home mortgage interest expense deduction is correct? A. The...

Which of the following statements regarding the home mortgage interest expense deduction is correct?

A. The limit on acquisition indebtedness depends on filing staus.

B. Taxpayers who do not itemize deductions can still deduct home mortage interest as a from AGI deduction.

C. The limit on acquisition indebtedness applies only in the year of aquisition.

D. The limit on acquisition indebtedness applies to one (not multiple) loans.

Expert Solution

ANSWER-

THE (A) STATEMENT REGARDING THE HOME MORTGAGE INTEREST EXPENSE DEDUCTION IS TRUE OR CORRECT. As, According to the new act, The Tax Cuts and Jobs Act(TCJA) which is for 2018 to 2025, the homeowners are allowed to deduct interest on home loans up to $7,50,000 but in the same case, the taxpayer's who use married filing separate status, has the home acquisition debt limit is $3,75,000. This proofs that, the limit of accquistion indebtness, depends on filing status as we see on case of married filing separate status.

and in b) this statement is not true as qualified homeowners who can deduct mortgage home interest are only those who meet the following requirements-

• homeowners who filed an IRS Form 1040 and itemized your deductions.

• The mortgage is a secured debt on a qualified home which you own.

So, the taxpayer's who didn't itemized deductions will not be able to deduct mortgage home interest expense. Therefore this statement is incorrect.

and in C) This statement is also not correct as the most common mortgage terms are 15 years and 30 years. The term in years means the number of years over which you will repay this loan. So, the statment states that the limit on acquisition applies only in the year of acquisition is false or incorrect.

and in the case D) the statement is also not correct as it states that the limit of accquistion indebtness applies to one loans and not multiple loans as it's not true because in some cases, it applies to two loans as well but may be the situation is that the home is your main home or a second home but the interest paid on third or fourth homes isn't deductible.

So, only(A) statement is true.

ekkarill92 answered 2 years ago

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