In 2006, Liam, who is single, purchased a personal residence for $340,000 and to

ID: 2452366 • Letter: I

Question

In 2006, Liam, who is single, purchased a personal residence for $340,000 and took out a mortgage of $200,000 on the property. In May of the current year, when the residence had a fair market value of $440,000 and Liam owed $140,000 on the mortgage, he took out a home equity loan for $220,000. He used the funds to purchase a recreational vehicle, which he uses 100% for personal use.

a. Can Liam deduct all of the interest related to the original mortgage?
Select Yes No Item 1

b. Can Liam deduct all of the interest related to the home equity loan of $220,000?
Select Yes No Item 2

c. For the current year, the maximum amount of debt on which Liam can deduct interest is $ ________.

Explanation / Answer

In 2006, Liam, who is single, purchased a personal residence for $340,000 and to

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In 2006, Liam, who is single, purchased a personal residence for $340,000 and to

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