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Assume that your aunt sold her house on December 31 and that she took a mortgage in the amount of $50,000 as part of the payment. The mortgage has a stated (or nominal) interest rate of 10 percent, but it calls for payments every 6 months, beginning on June 30, and the mortgage is to be amortized over 20 years. Now, one year later, your aunt must file Schedule B of her tax return with the IRS informing them of the interest that was included in the two payments made during the year. (This interest will be income to your aunt and a deduction to the buyer of the house.) What is the total amount of interest that was paid during the first year?
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