Practice Test Geeks(CMPS) Certified Mortgage Planning Specialist Practice Test
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Mortgage and Tax Strategies Flashcards

7 cards from real CMPS practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

Read the first 7 Mortgage and Tax Strategies flashcards as text

  1. A borrower pays $18,000 in mortgage interest and $4,500 in property taxes in 2024. What is the maximum combined SALT deduction they can claim?

    Answer: $10,000 combined

    The Tax Cuts and Jobs Act caps the state and local tax (SALT) deduction at $10,000 per year for all filing statuses except married filing separately.

  2. Which IRS form does a lender use to report mortgage interest paid by a borrower exceeding $600 in a tax year?

    Answer: Form 1098

    Lenders issue IRS Form 1098 (Mortgage Interest Statement) to report mortgage interest of $600 or more paid by a borrower during the year.

  3. A married couple files jointly and has $850,000 in acquisition debt on their primary home originated in 2018. How much of the mortgage interest is deductible?

    Answer: Interest only on $750,000

    For loans originated after December 15, 2017, the mortgage interest deduction is limited to the first $750,000 of acquisition debt for joint filers.

  4. A homeowner takes a $50,000 HELOC to fund a vacation. Under current tax law, how is the interest treated?

    Answer: Not deductible because proceeds were not used to buy, build, or improve the home

    Post-TCJA, HELOC interest is only deductible if the funds are used to buy, build, or substantially improve the taxpayer's qualified residence.

  5. What is the primary tax advantage of a mortgage on a rental property compared to a primary residence mortgage?

    Answer: Interest is fully deductible as a business expense on Schedule E

    Mortgage interest on a rental property is a business expense reported on Schedule E and is not subject to the $750,000 acquisition debt cap that applies to personal residences.

  6. Under the Section 121 exclusion, what is the maximum gain a single taxpayer can exclude from the sale of a primary residence?

    Answer: $250,000

    A single taxpayer who has owned and used the home as a primary residence for at least 2 of the last 5 years can exclude up to $250,000 of capital gain.

  7. A client wants to reduce their taxable income by accelerating mortgage points paid on a refinance. How must the points be treated for tax purposes?

    Answer: Amortized over the life of the new loan

    Points paid on a refinance must generally be amortized (deducted ratably) over the life of the loan rather than deducted in full in the year paid.