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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 %

Respuesta :

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%

Parrain

Based on the amount acquired from the refinancing agreement, the percentage that is deductible is C. 75%

Current tax laws allow one to deduct interest on up to $300,000 on home acquisition debt which is what Bob and Carol did.

The amount that is deductible is therefore:

= Interest deductible loan / Refinanced amount

= 300,000 / 400,000 x 100%

= 75%

In conclusion, option C is correct.

Find out more about refinancing at https://brainly.com/question/6433816.

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