Question

You can deduct loan interest in which of the following circumstances?

(a) On your house and your motor home.
(b) Points on a home equity loan incorporated into the loan.
(c) The automobile used to travel to and from work.
(d) Credit card debt used for improving your home.

Answer 1

The correct circumstance for deducting loan interest is b) points on a home equity loan incorporated into the loan.

Step-by-step explanation:

To deduct loan interest, there are specific circumstances that apply. In the given options, the correct circumstance for deducting loan interest is option (b) - Points on a home equity loan incorporated into the loan.

Interest on a home equity loan can be deducted if the loan is used to improve or renovate the home. These points can also be deducted as long as they are incorporated into the loan amount.

Therefore, the correct option for deducting loan interest is (b) - Points on a home equity loan incorporated into the loan.