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ID: 2376744 • Letter: I
Question
id="mathjax_msie_frame">> Matt, who is single, has always elected to itemize deductions rather than take the standard deduction. id="mathjax_msie_frame">> In prior years, his itemized deductions always exceeded the standard deduction by a substantial amount. id="mathjax_msie_frame">> As a result of paying off the mortgage on his residence, he projects that his itemized deductions for 2012 will exceed the standard id="mathjax_msie_frame">> deduction by only $500. Matt anticipates that the amount of his itemized deductions will remain about the same in the foreseeable id="mathjax_msie_frame">> future. Matt's AGI is $150,000. He is investing the amount of his former mortgage payment each month in tax-exempt bonds that were issued five years ago. A friend recommends that Matt buy a beach house to increase his itemized id="mathjax_msie_frame">> deductions with the mortgage interest deduction. What are the relevant tax issues for Mike? id="mathjax_msie_frame">> id="mathjax_msie_frame"> Matt, who is single, has always elected to itemize deductions rather than take the standard deduction. id="mathjax_msie_frame"> Matt, who is single, has always elected to itemize deductions rather than take the standard deduction. In prior years, his itemized deductions always exceeded the standard deduction by a substantial amount. id="mathjax_msie_frame"> In prior years, his itemized deductions always exceeded the standard deduction by a substantial amount. As a result of paying off the mortgage on his residence, he projects that his itemized deductions for 2012 will exceed the standard id="mathjax_msie_frame"> As a result of paying off the mortgage on his residence, he projects that his itemized deductions for 2012 will exceed the standard deduction by only $500. Matt anticipates that the amount of his itemized deductions will remain about the same in the foreseeable id="mathjax_msie_frame"> deduction by only $500. Matt anticipates that the amount of his itemized deductions will remain about the same in the foreseeable future. Matt's AGI is $150,000. He is investing the amount of his former mortgage payment each month in tax-exempt bonds that were issued five years ago. A friend recommends that Matt buy a beach house to increase his itemized id="mathjax_msie_frame"> future. Matt's AGI is $150,000. He is investing the amount of his former mortgage payment each month in tax-exempt bonds that were issued five years ago. A friend recommends that Matt buy a beach house to increase his itemized deductions with the mortgage interest deduction. What are the relevant tax issues for Mike? id="mathjax_msie_frame"> deductions with the mortgage interest deduction. What are the relevant tax issues for Mike?Explanation / Answer
1) Matt's itemized deduction will be limited if his mortgage exceeds 500k.
2) The beach house would be a second home for Matt. For the beach house to qualify for mortgage deduction, the home should be used for more than 14 days in a year or for more than 10% of the days if it has been rented out.
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