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Business

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akes out a $200,000 home equity loan to put an addition on the main home. Both loans are secured by the main

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

In January 23021, Roger takes out $500,000 mortgage to purchse a main homef with a fair market value of $2,000.000. In February 2021, the taxpayer takes out a $200,000 home equity loan to put an addition on the main home. Both loans are secured by the main home and the total does not exceed the cost of the home. in 2021, Roger pays $10,000 interest on the first mortgage and $7,000 interested on the home equity loan. How much of the interest is deductible?

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