Bob and Carol refinanced their sole residence, valued at $500,000, in 2019. Under the refinancing arrangement, they refinanced their $300,000 indebtedness for $400,000, receiving $100,000 in cash that they used to pay for their daughter's wedding. What percent of the interest they pay on the refinanced property are they able to deduct? A) 25 % B) 50 % C) 75 % D) 100 %

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Maddox

Business

19 April, 19:55

Bob and Carol refinanced their sole residence, valued at $500,000, in 2019. Under the refinancing arrangement, they refinanced their $300,000 indebtedness for $400,000, receiving $100,000 in cash that they used to pay for their daughter's wedding. What percent of the interest they pay on the refinanced property are they able to deduct? A) 25 % B) 50 % C) 75 % D) 100 %

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Hallie Schultz · Answer 1

The percentage of interest they pay on the refinanced property are they are able to deduct 75%

Explanation:

based on the IRS,

The first $300,000 of the new loan is treated as home acquisition debt. The interest on that amount of the new loan qualifies as an itemisable deduction The last $100,000 of the new loan can be used for daughter's wedding is treated as home equity debt.

$ 300,000/$ 400,000 or 75% will qualify for deduction.

hence it is said to be 75%