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Unformatted text preview: qualified student loan interest in 2009.
He is single, and has a modified AGI of $63,000.
required = $63,000 - $60,000
$15,000 Thus, Tom’s FOR AGI deduction is $2,000 ($2,500-$500=$2,000)
24 Qualified Residence Interest
x Interest on qualified loans secured by a primary or
secured secondary residence is deductible
Two types of qualified loans:
x Acquisition Debt: debt incurred to purchase, construct, or substantially improve a residence
x Home Equity Debt: debt secured by a primary or
secondary residence that does not exceed FMV—
acquisition debt. The loan proceeds may be used for
x “Residence” includes vacation homes, condos,
mobile homes, boats, or RVs if they include basic
25 Limitations on Qualified
Residence Interest Deductions
x Deductible interest on aggregate acquisition debt is
Deductible limited to $1,000,000 of debt ($500,000 if MFS)
x Deductible interest on home equity loans is limited
Deductible to $100,000 of debt ($50,000 if MFS)
x Acquisition debt is increased only if capital
only improvements are made
x Home equity debt may be increased at any time 26 Qualified Residence Interest Deductions Example 1
x John & Marcia make a $300,000 down payment and
John take out a $1,200,000 mortgage to purchase a
residence worth $1,500,000
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This note was uploaded on 06/06/2011 for the course ACE 346 taught by Professor Peter during the Spring '11 term at University of Illinois, Urbana Champaign.
- Spring '11