Sue owns a home in Arizona and in New York She spends winte

·         Sue owns a home in Arizona and in New York. She spends winters in Arizona and summers in New York. She also has a houseboat in Hawaii. All of these are her personal residences, and none is rented. All of the properties have mortgages on which she pays interest.

o    What are the limits, if any, on the deductibility of the mortgage interest based on this situation?

o    Is the deduction for AGI or from AGI?

o    When a taxpayer has loans that exceed the limits for deductibility, how is the amount of deductible interest expense determined? Show calculation without amounts.

Solution

in this situation she is eligible to get deductions for only the recidential home located in Arizona, for the Hawaii houseboat she wont get the deductions.

the deduction is for AGI (adjustable gross income) only not from AGI

if a tax payer is eligibility is only $2000, but his if he really paying $2500, then the 2000 only eligible for deductions. the remaining is can not be deduct.