Interest of refinancing-home equity loans

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Reference no: EM1358284

If an individual has equity in the real estate that he uses as his principle residence and obtains a home equity line of credit on that real estate and then draws on that home equity line of credit to pay for his long-planned vacation to Italy, the interest that is paid on the home equity line of credit is:

a. deductible.

b. not deductible to the extent the amount borrowed on the line of credit was not used to improve the principle residence.

c. deductible only to the extent of 50% of the balance due on the line of credit.

d. is deductible only in the year following the year when the money was borrowed on the line of credit.

If an individual taxpayer acquires a mortgage to buy his principle residence and then, several years later, refinances that mortgage with a new mortgage, the interest on that new mortgage is:

a. deductible.

b. not deductible.

c. deductible but only in the amount of interest that would be deductible under the original mortgage.

d. deductible but any interest on amounts in excess of the fair market value of the real estate is not deductible.

Reference no: EM1358284

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