Interest Deduction (OBJ. 4) The Greenfields’ 2020 AGI is $98,500, which includes $620 of taxable interest income. They incurred the following interest expenses during the year.
- Interest Deduction (OBJ. 4) The Greenfields’ 2020 AGI is $98,500, which includes $620 of taxable interest income. They incurred the following interest expenses during the year.
|
Credit Card Interest |
$79 |
|
Automobile loan interest (on their older car) |
$337 |
|
Mortgage Interest on the main home prior to refinancing |
$6,300 |
|
Mortgage Interest on the main home after refinancing |
$7,200 |
|
Points paid on main home refinancing ($190,000x3%) |
$5,700 |
|
Mortgage interest on vacation home |
$13,080 |
|
Investment interest expense on a loan to purchase corporate stocks |
$543 |
|
Investment interest expense on a loan to purchase tax-exempt bonds |
$381 |
The Greenfields originally paid $260,000 for their main home. At the beginning of 2020, the home was worth $300,000 and the balance on the mortgage on their main home was $138,000. On May 1, the Greenfields refinanced the mortgage on their main home with a $190,000, 10-year loan. They used the extra proceeds to buy a new car, take a vacation, and consolidate other loans. Compute the Greenfields’ interest expense deduction on Schedule A.
Schedule A:
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