Greetings,
The answer is b. 100,000
See Home equity debt limit. There is a limit on the amount of debt that can be treated as home equity debt. The total home equity debt on your main home and second home is limited to the smaller of:
$100,000 ($50,000 if married filing separately), or
The total of each home's fair market value (FMV) reduced (but not below zero) by the amount of its home acquisition debt and grandfathered debt. Determine the FMV and the outstanding home acquisition and grandfathered debt for each home on the date that the last debt was secured by the home.
They also may deduct interest on the 250,000 outstanding home acquisition debt.
I hope this helps.
Best wishes.
Enrolled Agent
I have prepared individual, trust, partnership, and corporate taxes since 1987.