Respuesta :
Analyzing Molly's Mortgage Interest Deduction:
Molly can deduct up to $15,000 for mortgage interest on her Schedule E, but there might be limitations based on additional factors. Here's the breakdown:
Given Information:
- Purchase price: $500,000
- Mortgage loan: $350,000
- Mortgage interest for the year: $15,000
- Rental income: $50,000
Key Points:
- The maximum mortgage interest deduction allowed on Schedule E is the lesser of:
- Actual mortgage interest paid ($15,000 in this case)
- 80% of rental income from the property (in this case, 80% * $50,000 = $40,000)
Calculation:
- Since $15,000 is less than $40,000, Molly can deduct the full $15,000 for mortgage interest on her Schedule E.
However, there's a potential limitation:
- The 80% rule applies to the total rental income from all your rental properties combined.
- If Molly owns other rental properties and their combined rental income exceeds $100,000, the 80% limitation might be applied differently.
Recommendation:
- Consult a tax advisor to determine the exact amount of mortgage interest deduction you are eligible for, considering your specific tax situation and any other rental properties you own.
Additional Notes:
- Molly might also be able to deduct other expenses related to the rental property, such as repairs, maintenance, and depreciation.
- Tax laws can be complex, so seeking professional advice is crucial for maximizing deductions and ensuring compliance.
I hope this clarifies the situation and provides helpful guidance for Molly's tax deductions!
