Michaela owns a principal residence in Georgia, a townhouse in San Francisco, and a yacht in Cape Cod. All of the properties have mortgages on which Michaela pays interest. a. For which residences can Michaela deduct mortgage interest? Principal residence plus one of the two other residences Feedback ▼Check My Work Qualified residence interest is interest paid or accrued during the taxable year on indebtedness (subject to limitations) secured by any property that is a qualified residence of the taxpayer. b. What are the limitations on Michaela's mortgage interest deduction? What strategy should Michaela consider to maximize her mortgage interest deduction? Michaela's deduction is limited to interest on acquisition indebtedness up to $1,000,000 or $ highest if the debt existed at December 15, 2017 100,000 X if incurred after that date. Therefore, she should choose the second residence that will result in the interest deduction.
Michaela owns a principal residence in Georgia, a townhouse in San Francisco, and a yacht in Cape Cod. All of the properties have mortgages on which Michaela pays interest. a. For which residences can Michaela deduct mortgage interest? Principal residence plus one of the two other residences Feedback ▼Check My Work Qualified residence interest is interest paid or accrued during the taxable year on indebtedness (subject to limitations) secured by any property that is a qualified residence of the taxpayer. b. What are the limitations on Michaela's mortgage interest deduction? What strategy should Michaela consider to maximize her mortgage interest deduction? Michaela's deduction is limited to interest on acquisition indebtedness up to $1,000,000 or $ highest if the debt existed at December 15, 2017 100,000 X if incurred after that date. Therefore, she should choose the second residence that will result in the interest deduction.
Chapter10: Deduct Ions And Losses: Certain Itemized Deduct Ions
Section: Chapter Questions
Problem 8DQ
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Transcribed Image Text:Michaela owns a principal residence in Georgia, a townhouse in San Francisco, and a yacht in Cape Cod. All of the properties have
mortgages on which Michaela pays interest.
a. For which residences can Michaela deduct mortgage interest?
Principal residence plus one of the two other residences
Feedback
▼Check My Work
Qualified residence interest is interest paid or accrued during the taxable year on indebtedness (subject to limitations) secured by any property
that is a qualified residence of the taxpayer.
b. What are the limitations on Michaela's mortgage interest deduction? What strategy should Michaela consider to maximize her mortgage
interest deduction?
Michaela's deduction is limited to interest on acquisition indebtedness up to $1,000,000
or $
highest
if the debt existed at December 15, 2017
100,000 X if incurred after that date. Therefore, she should choose the second residence that will result in the
interest deduction.
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