What is the maximum amount of debt on which he can deduct

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David, a single taxpayer, took out a mortgage on his home for $300,000 nine years ago. In August of this year, when the home had a fair market value of $550,000 and he owed $225,000 on the mortgage, he took out a home equity loan for $350,000. David used the funds to purchase a yacht to be used for recreational purposes. What is the maximum amount of debt on which he can deduct home equity interest?

$50,000.
$100,000.
$325,000.
$350,000.

Reference no: EM13135436

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