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Author: Skwire One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 120807  
Subject: Re: home mortgage deduction Date: 2/15/2000 8:08 PM
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If one earns $400,000 and has $350,000 taxable income, is it possible to by a house (first and only residence) and fully deduct the mortgage payments from the taxable income?
A CPA told me that this would not be possible at an income like this, however I could not find this rule anywhere in the IRS publications.


Perhaps the CPA was referring to the rules limiting (most) itemized deductions of high-income taxpayers. In 1999, for example, the amount of allowable itemized deductions was reduced by 3% of the difference between (i) a taxpayer's adjusted gross income (assuming the taxpayer was not married but filing a separate return) and (ii) $126,600. The limitation does not reduce the allowable deductions below a certain percentage and does not apply to deductions for (1) medical expenses, (2) investment interest and (3) casualty, theft or wagering losses, generally.

If the person in your hypo. has $400,000 of adjusted gross income, over $8000 of itemized deductions might not be allowed. Check out TMF Taxes article on itemized deduction limits at the following link:

http://www.fool.com/School/Taxes/1999/taxes991223.htm

The Eiffel Tower is the Empire State Building after taxes - Anonymous
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