Taxfun
Level 3

Facts: .in 2016, the taxpayer took a acquisition loan  and loan was secured by his principle residence. The outstanding loan amount is $550,000 in 2019.

in 2017, the taxpayer took a acquisition loan  and loan was secured by second home. The outstanding loan amount in 2019 is $150,000. In Nov 2019, he converted the second home to a rental property.

in Nov 2019, the taxpayer purchased the a new home as a second home. the loan amount is $300,000.

In 2018, the taxpayer took a home equity loan which was secured by his principal residence. However the proceeds were used to improve a rental property. The outstanding balance in 2019 $150,000.

Question:

1) which limitation should be used when calculating deductible 2019 mortgage interest $750,000 or $1m on Schedule A? 

2) Is 100% of interest or only a portion deductible on the Schedule E ? or it is not deductible at all, because total loan amount is over $1m?

 

thanks

 

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