Florida Real Estate Practice Exam

Which of the following is a true statement about deducting interest on mortgages taken out in tax years between 2018 and 2025?

1. Interest on the first $500,000 of mortgage debt is deductible for married couples filing jointly or $375,000 for married couples filing separately.

2. Interest on the first $750,000 of mortgage debt is deductible for married couples filing jointly or $375,000 for married couples filing separately.

3. The loan can be used for purchase or making improvements, as well as for other purposes.

4. The loan cannot be for more than the borrower's most recent year's salary.

The correct answer is: Interest on the first $750,000 of mortgage debt is deductible for married couples filing jointly or $375,000 for married couples filing separately.

The correct answer is B because under the Tax Cuts and Jobs Act of 2017, the limit on deductible mortgage debt for married couples filing jointly is $750,000, as opposed to the previous limit of $1 million. Options A, C, and D are incorrect because they do not reflect the updated limits outlined in the new tax law. Option A refers to the previous limit which was in place before the new tax law went into effect. Option C is incorrect because while the loan can be used for purchase or making improvements, it is not the only purpose for which it can be used. And Option D is incorrect because the loan can be for any amount, as long as it does not exceed the limit of $750,000.