During the year (not a leap year), Anna rented her vacation home for 30 days, used it personally for 20 days, and left it vacant for 315 days. She had the following income and expenses: Rent income $ 7,000 Expenses Real estate taxes 2,500 Interest on mortgage 9,000 Utilities 2,400 Repairs 1,000 Roof replacement (a capital expenditure) 12,000 Depreciation 7,500 Compute Anna’s net rent income or loss and the amounts she can itemize on her tax return, using the court’s approach to allocating property taxes and interest. How would your answer in part (a) differ using the IRS’s method of allocating property taxes and interest?
During the year (not a leap year), Anna rented her vacation home for 30 days, used it personally for 20 days, and left it vacant for 315 days. She had the following income and expenses:
|
Rent income |
$ 7,000 |
|
Expenses |
|
|
Real estate taxes |
2,500 |
|
Interest on mortgage |
9,000 |
|
Utilities |
2,400 |
|
Repairs |
1,000 |
|
Roof replacement (a capital expenditure) |
12,000 |
|
|
7,500 |
- Compute Anna’s net rent income or loss and the amounts she can itemize on her tax return, using the court’s approach to allocating property taxes and interest.
- How would your answer in part (a) differ using the IRS’s method of allocating property taxes and interest?
Treatment to be made in case of Rented Property:
Income From House Tax:
If the resident of an individual house rented his/her residence for 15 days or more in a year and he/she does not use for his/her personal use for more than the greater of the following:
a) 14 days
OR
b) 10% of the total days rented,
then the house is treated as rental property.
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