Patricia purchased a home on January 1, 2017 for $1,250,000 by making a down payment of...

Patricia purchased a home on January 1, 2017 for $1,250,000 by making a down payment of $100,000 and financing the remaining $1,150,000 with a 30-year loan, secured by the residence, at 6 percent. During 2017-2019, Patricia made interest-only payments on the loan of $69,000. What amount of the $69,000 interest expense that Patricia paid during 2019 may she deduct as an itemized deduction?

a - $0

b - $9,000

c - $60,000

d - $69,000

Expert Solution

Facts of the case
Date of purchase = Jan 1, 2017 (very important)
Value = 1,250,000 but mortgage is limited to 1,150,000
Interest = 6%

Relevant provision / law

A deduction is allowed on the interest but it is capped at 750,000 (principal value) of indebtedness.
However, the limit is 1,000,000 if the indebtedness is before December 16, 2017

Applicability and conclusion

In the given case, the purchase is before December 16, 2017. Higher limit is available

So the correct answer is 6% X 1,000,000 = 60,000 Option C

ekkarill92 answered 2 years ago

Jessica purchased a home on January 1, 2018 for $580,000 by making a down payment of...

Jessica purchased a home on January 1, 2018 for $580,000 by making a down payment of $230,000 and financing the remaining $350,000 with a 30-year loan, secured by the residence, at 6 percent. During 2018 and 2019, Jessica made interest-only payments on this loan of $21,000 (each year). On July 1, 2018, when her home was worth $580,000 Jessica borrowed an additional $145,000 secured by the home at an interest rate of 8 percent. During 2018, she made interest-only payments...

You purchase a $1,250,000 home by providing a down payment equal to 20% of the purchase price.

You purchase a $1,250,000 home by providing a down payment equal to 20% of the purchase price. You take out a loan for the remaining balance that requires equal end-of -month payments over the next 30 years with an EAR of 3.8%. How interest will be paid with the first two payments?

A home is purchased for 395,000 with a 10% down payment and a 30 year amortized...

A home is purchased for 395,000 with a 10% down payment and a 30 year amortized mortgage charging 3.6% compounded monthly find: a) the amount borrowed, b) the size of the monthly mortgage payment and c) the total interest paid over 30 years?

Rick Rueta purchased a $88,000 home at 7.5% for 30 years with a down payment of...

Rick Rueta purchased a $88,000 home at 7.5% for 30 years with a down payment of $25,000. His annual real estate tax is $1,932 along with an annual insurance premium of $1,092. Rick’s bank requires that his monthly payment include an escrow deposit for the tax and insurance. What is the total payment each month for Rick? (Round your answer to the nearest cent.)

Lucinda Lacy purchased a foreclosed house today for $105,500 by making a down payment of 15%...

Lucinda Lacy purchased a foreclosed house today for $105,500 by making a down payment of 15% of the purchase price and paying closing costs of: Loan origination fee 1.7% of purchase price Appraisal fee $325 Survey fee 210 Attorney’s fee 420 Processing fee 300 Escrow fee 240 Other miscellaneous costs 620 Lucinda has a mortgage loan with an interest rate of 3.9% APR, compounded monthly for 30 years. Her taxes and insurance are $375 per month. Lucinda has an...

A mobile home worth $41,000 is purchased with a down payment of $6,000 and monthly month-end...

A mobile home worth $41,000 is purchased with a down payment of $6,000 and monthly month-end payments for 15 years. If the interest rate is 9% per annum compounded monthly, determine the balance just after the 10th payment, in 2 decimal places.

A mobile home worth $56,000 is purchased with a down payment of $6,000 and monthly month-end...

A mobile home worth $56,000 is purchased with a down payment of $6,000 and monthly month-end payments for 15 years. If the interest rate is 9% per annum compounded monthly, determine the balance just after the 10th payment, in 2 decimal places.

Judy recently purchased her first home for $220,000. She made a down payment of $20,000, and...

Judy recently purchased her first home for $220,000. She made a down payment of $20,000, and financed the balance over 15 years, at 6% interest. How much is her principal and interest payment each month?

Create an Amortization Schedule for a home that cost $259,000 with 20% down for a down-payment....

Create an Amortization Schedule for a home that cost $259,000 with 20% down for a down-payment. Do not use an online amortization schedule. Note the textbook amortization schedule is using an annual payment. Please complete a schedule for both 180 months (15 years) and 360 months (30 years). The interest rate for the year is 2.75% according to Bankrate for the area the home is in. Remember to divide your interest by 12 to get a monthly rate. How much...

You put 20% down on a home with a purchase price of $250,000. The down payment...

You put 20% down on a home with a purchase price of $250,000. The down payment is thus $50,000, leaving a balance owed of $200,000. A bank will loan you this remaining balance at 3.91% APR. You will make monthly end-of-the-period payments with a 30-year payment schedule. What is the monthly annuity payment under this schedule?

Question