Assume year 1 is 2019 and by the beginning of year 4, the Sanchezes have paid down the principal amount


Assume year 1 is 2019 and by the beginning of year 4, the Sanchezes have paid down the principal amount of the loan to $500,000. In year 4, they borrow an additional $100,000 through a loan secured by the home in order to finish their basement. The new loan carries a 7 percent interest rate and is termed a “home equity loan” by the lender. What amount of interest can the Sanchezes deduct on the $100,000 loan?


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