Rick and Carol Ryan, Married Taxpayers, Took Out a Mortgage

question 7

Multiple Choice

Rick and Carol Ryan, married taxpayers, took out a mortgage of $160,000 when purchasing their home ten years ago. In October of the current year, when the home had a fair market value of $200,000 and they owed $125,000 on the mortgage, the Ryans took out a home equity loan for $110,000. They used the funds to purchase a sailboat to be used for recreational purposes. The sailboat does not qualify as a residence. What is the maximum amount of debt on which the Ryans can deduct home equity interest?

• A)$75,000
• B)$90,000
• C)$110,000
• D)$125,000
• E)None of the above

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