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Mary purchased a home in 2020 for $200,000. She made a 20-percent down payment and financed the rest with a 15- year loan at six percent. In 2020, she took out a $20,000 home equity loan and used the proceeds to go on a trip around the world. In 2021, her interest payments were $9,600 on her mortgage and $1,400 on her home equity loan. What amount can she deduct in 2021 as an itemized deduction

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anthougo

The amount Mary can deduct in 2021 as an itemized deduction is $9,600 because the home equity loan of $20,000 used for the world trip does not qualify as acquisition indebtedness.

Data and Calculations:

Cost of home purchased in 2020 = $200,000

Down payment for the home = $40,000 ($200,000 x 20%)

Mortgage value = $160,000 ($20,000 - $40,000)

Maturity period of mortgage = 15 years

Interest rate = 6%

Interest expense = $9,600 ($160,000 x 6%)

Home equity loan = $20,000

Interest on home equity loan = $1,400

Thus, Mary can only deduct $9,600 as an itemized deduction in 2021.

Learn more: brainly.com/question/14187831

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