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Refer to the instructions for line 8 on the 2018 Schedule A instructions (Home Mortgage Interest...

Refer to the instructions for line 8 on the 2018 Schedule A instructions (Home Mortgage Interest Deduction). Assume taxpayer borrowed $1.5 million to purchase a home on January 1, 2017 at 4% interest. Assume the taxpayer pays only interest and does not repay any of the principal. What is the annual interest cost ?

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Amount of borrowing S1.5 Milliorn Interest rate-490 Borrowing date = Jan 1 , 2017 Annual interest cost-Amount of borrowing * Interest rate * 1 Year = $1-5 Million * 4% *1 0.06 Million Ans: Annual interest cost -S0.06 Million - S60,000

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