Natalie owns a condominium near Cocoa Beach in Florida. This year, she incurs th

Question

Natalie owns a condominium near Cocoa Beach in Florida. This year, she incurs the following expenses in connection with her condo:

During the year, Natalie rented out the condo for 75 days, receiving $10,000 of gross income. She personally used the condo for 35 days during her vacation.

Assume Natalie uses the Tax Court method of allocating expenses to rental use of the property. (Do not round intermediate calculations. Round your final answers to the nearest whole dollar amount.)

What is the total amount of for AGI (rental) deductions Natalie may deduct in the current year related to the condo?

For AGI Deductions

What is the total amount of itemized deductions Natalie may deduct in the current year related to the condo?

itemized deductions

   

If Natalie’s basis in the condo at the beginning of the year was $150,000, what is her basis in the condo at the end of the year?

basis___________    

Assume that gross rental revenue was $2,000 (rather than $10,000). what amount of for AGI deductions may Natalie deduct in the current year related to the condo?

For AGI deductions

    

  Insurance $1,000   Advertising expense 500   Mortgage interest 3,500   Property taxes 900   Repairs & maintenance 650   Utilities 950   Depreciation 8,500

Explanation / Answer

A. When rental property is classified as a vacation home, depreciation and other expenses can be deducted only to the extent of the net rental income from the property (minus the allocable portion of mortgage interest and real estate taxes).

Total amount of deduction = $1000+650+950+8500 = $7,600 but upto rental revenue.

B. Itemized Deductions

C.

D. If gross rental revenue was $2,000. then Natalie may Deduct upto $2,000.

Depreciation and other expenses can be deducted only to the extent of the net rental income from the property

Insurance $1,000 Repairs & maintenance $650 Utilities $950 Depreciation $8,500

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