Question

Patricia purchased a home on January 1, year 1 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%. During year 1, Patricia made interest-only payments on the loan of $69,000.What amount of the $69,000 interest expense Patricia paid during year 1 may she deduct as an itemized deduction?

A. $63,000
B. $60,000
C. $45,000
D. $66,000

Answer 1

B. $60,000

Step-by-step explanation:

Deduction is only available only up to amount $1,000,000

Interest on such amount = $1,000,000*6%

= $60,0000

Only $60,000 out of $69,000 is available for deduction.