Supposing the sanchezes use the second loan to landscape

Assignment Help Other Management

Reference no: EM13460020

Javier and Anita Sanchez purchased a home on January 1, year 1 for $500,000 by paying $200,000 down and borrowing the remaining $300,000 with a 7 percent loan secured by the home. The loan requires interest-only payments for the first five years. The Sanchezes would itemize deductions even if they did not have any deductible interest. On January 1, the Sanchezes also borrowed money on a second loan secured by the home for $75,000. The interest rate on the loan is 8 percent and the Sanchezes make interest-only payments in year 1 on the second loan.

a. Assuming the Sanchezes use the second loan to landscape the yard to their home, what is the maximum amount of interest expense (on both loans combined) they are allowed to deduct year 1?

b. Assume the original facts and that the Sanchezes use the $75,000 loan proceeds for an extended family vacation. What is the maximum amount of interest expense (on both loans combined) they are allowed to deduct in year 1?

c. Assume the original facts, except that the Sanchezes borrow $120,000 on the second loan and they use the proceeds for an extended family vacation and other personal expenses. What is the maximum amount of interest expense (on both loans combined) they are allowed to deduct in year 1?

Reference no: EM13460020

Questions Cloud

What amount of interest expense might the franklins deduct : on january 1 of year 1 arthur and aretha franklin purchased a home for 1.5 million by paying 200000 down and borrowing

Explain the characteristics of pay structure illustrate in : describe the characteristics of pay structure. define in your own words a pay policy line and how it is

The social exchange theory describes a particular way of : 1.compare and contrast the mlk and malcolm x clips .what is the problem according to each? how does each propose to fix

Perform suitable statistical test two tailed alpha 05 to : in a study of the relationship between caffeine and stress college students indicated how many cups of coffee they

Supposing the sanchezes use the second loan to landscape : javier and anita sanchez purchased a home on january 1 year 1 for 500000 by paying 200000 down and borrowing the

Explain at least five strategies for establishing : describe at least five strategies for establishing credibility when preparing persuasive messages. your response should

What degree program are you pursuing at university of : what degree program are you pursuing at university of phoenix? how is this degree program important in todays society

Explain the concept of personalized self-serve solutions : 1.sometimes we walk into a store and we feel like were the most important person in the world. other times we enter a

Explain five guidelines to follow in writing effective : describe five guidelines to follow in writing effective messages when giving negative performance reviews. explain why

User Account

All Pages