Miller owns a personal residence with a fair market value of $195,000 and an outstanding first mortgage of $157,500. This year, Miller gets a home equity loan of $10,000 to purchase new jet skis. How much of this mortgage debt is treated as qualified residence indebtedness?$

Question
Asked Apr 10, 2019

Miller owns a personal residence with a fair market value of $195,000 and an outstanding first mortgage of $157,500. This year, Miller gets a home equity loan of $10,000 to purchase new jet skis.
How much of this mortgage debt is treated as qualified residence indebtedness?
$

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Expert Answer

Step 1

Qualified principal residence indebtedness includes the debt incurred or debt secured by a primary residence to acquire, construct or improve the primary residence.

Step 2

Fair market value – First mortgage= $195,000 - $157,500

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