He is single and has a modified agi of 63000 500

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Unformatted text preview: qualified student loan interest in 2009. He is single, and has a modified AGI of $63,000. $500 reduction required = $63,000 - $60,000 × $2,500 $15,000 Thus, Tom’s FOR AGI deduction is $2,000 ($2,500-$500=$2,000) ($2,500-$500=$2,000) Thus, 24 Qualified Residence Interest x Interest on qualified loans secured by a primary or Interest secured secondary residence is deductible secondary Two types of qualified loans: x Acquisition Debt: debt incurred to purchase, construct, or substantially improve a residence construct, 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 any purpose. any x “Residence” includes vacation homes, condos, Residence” mobile homes, boats, or RVs if they include basic living accommodations. living 25 Limitations on Qualified Limitations Residence Interest Deductions Residence x Deductible interest on aggregate acquisition debt is Deductible limited to $1,000,000 of debt ($500,000 if MFS) limited x Deductible interest on home equity loans is limited Deductible to $100,000 of debt ($50,000 if MFS) to x Acquisition debt is increased only if capital Acquisition only improvements are made improvements x Home equity debt may be increased at any time 26 Qualified Residence Interest Deductions Example 1 Example 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 resid...
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