Question

Wayne and Maria purchase a home on April 1 of the current year. In order to obtain a thirty-year mortgage, they are required to pay $7,200 in points at closing. Charging points is a customary business practice in the area. In addition, they pay $4,400 of interest during the year. What is their current year deduction related to their home?

Answer 1

Answer:

The current year deduction related to their home is $11,600

Explanation:

In this question, we are asked to calculate the current year deduction related to Wayne’s and Maria’s home purchase.

This can be obtained as follows: we must note that the points on purchase of a home are deductible even in the year paid provided some conditions are met.

The total deduction is thus = $7,200 + $4,400 = $11,600