Answer Happy

Lewis and Laurie are married and jointly own a home valued at
$245,000. They recently paid off the mortgage on their home. The
couple borrowed money from the local credit union in January of
2021. How much interest may the couple deduct in each of the
following alternative situations? (Assume they itemize deductions
no matter the amount of interest.) (Leave no answer blank. Enter
zero if applicable.) Problem 14-47 Part a (Algo)
a. The couple borrows $45,000, and the loan is secured by their
home. The credit union calls the loan a “home equity loan.” Lewis
and Laurie use the loan proceeds for purposes unrelated to the
home. The couple pays $2,100 interest on the loan during the year,
and the couple files a joint return.
b. The couple borrows $120,000, and the
loan is secured by their home. The credit union calls the loan a
“home equity loan.” Lewis and Laurie use the loan proceeds to add a
room to their home. The couple pays $5,450 interest on the loan
during the year, and the couple files a joint return.