Patricia purchased a home on january 1, 2017 for $1,350,000 by making a down payment of $100,000 and financing the remaining $1,250,000 with a 30-year loan, secured by the residence, at 6 percent. during year 2017 and 2018, patricia made interest-only payments on the loan of $75,000. what amount of the $75,000 interest expense patricia paid during 2018 may she deduct as an itemized deduction? (assume not married filing separately.)

The amount that is available as an itemized deduction is $ 60,000

Explanation:

GIVEN INFORMATION -   PURCHASE = $1350,000

                                          DOWN PAYMENT = $100,000

Rest of the amount ( $1250,00 ) was financed with a 30 year loan , which was secured by the residence and on which the interest is 6%.

INTEREST PAYMENTS MADE BY PATRICIA = $ 75,000

Now calculating the itemized deduction, the item which is allowed for deduction is on loan amount up to $1000,000 at the rate of 6% because the only deduction available here is home mortgage interest deduction(that is up to the debt amount of $1000,000 )

ITEMIZED DEDUCTION = LOAN AMOUNT X 6%

                                         = $1000,000 X 6%

                                         = $60000