Question

Bill has a mortgage loan on his personal residence. he decides to pay 18 months of interest in advance on october 1, 2016. the total advanced interest payment is $36,000. how much of the advance interest payment can he deduct in 2016?

a. $36,000
b. $6,000
c. $24,000
d. mortgage interest is not deductible.
e. if a taxpayer makes an advance payment, he may not deduct any interest.

Answer 1

In theory, Bill can deduct $36000 from his 2016 taxes. However, there are often caps on deductions, so there is really not enough information.