CMPS Mortgage and Tax Strategies 2

Question 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?

Accepted Answer

$10,000 combined

Answer

$22,500 combined

Answer

$18,000 interest only

Answer

$4,500 taxes only

Question 2

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

Accepted Answer

Form 1098

Answer

Form 1099-INT

Answer

Form 1099-MISC

Answer

Form 1040 Schedule A

Question 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?

Accepted Answer

Interest only on $750,000

Answer

All interest on $850,000

Answer

Interest only on $500,000

Answer

No deduction is available

Question 4

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

Accepted Answer

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

Answer

Fully deductible as home equity interest

Answer

Deductible only if the home is a primary residence

Answer

Deductible up to $50,000 in loan principal

Question 5

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

Accepted Answer

Interest is fully deductible as a business expense on Schedule E

Answer

Interest is subject to the SALT cap

Answer

Interest is deducted on Schedule A as itemized

Answer

Interest is exempt from alternative minimum tax

Question 6

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

Accepted Answer

$250,000

Answer

$125,000

Answer

$500,000

Answer

$1,000,000

Question 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?

Accepted Answer

Amortized over the life of the new loan

Answer

Deducted in full in the year of refinance

Answer

Deducted only if the loan is under $750,000

Answer

Added to the home's cost basis