How much interest can larry deduct

Reference no: EM132805627

Larry owns a personal residence with a FMV of $695,000 and an outstanding first mortgage of $320,450. On July 1, 2020, Larry borrows $82,000 that is secured by a second mortgage on his home to put an addition on his home as he and his wife are expecting their second child and are in need of more space for their children. He was able to borrow the cash at 3.5% interest rate. Larry files a federal tax return as married filing jointly. He reported an income of $68,000 for the year; loss of $65,000 on the sale of section 1244 stock acquired two years ago and he has an interest income of $6,000.

Problem 1: How much interest can Larry deduct? Round you answer to the nearest dollar.

Reference no: EM132805627

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