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

ID: 2582674 • Letter: N

Question

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

Insurance                                                      $1,000

Advertising expense                                          500

Mortgage interest                                            3,400

Property taxes                                                 1,500

Repairs & maintenance                                      650

Utilities                                                                  950

Depreciation                                                       8,500

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

Explanation / Answer

Therefore the total amount of for AGI (rental ) deductions is $ 9075.01

PARTICULARS AMOUNT ($) Gross Rental inome of natalie 10,000.00 LESS : Expenses Tier - 1 (1506.85)
  • Adverstising Expenses $ 500
  • Mortage Interest $ 3400 X 75 /365 days = $ 698.63
  • Property Taxes $ 1500 X 75/365 days = $ 308.22
Balance amount available 8493.15 LESS : Expenses Tier - II (1772.71)
  • Insurance $ 1000 X 75/ 110 days = $ 681.81
  • Repairs & Maintainence $ 650 X 75/110 days = $ 443.18
  • Utilities $ 950 X 75/110 days = $ 647.72
Balance Amount Available 6720.44 LESS : Expenses Tier - III (5795.45)
  • Depreciation $ 8500 X 75/110 = $ 5795.45
BALANCE - NET INCOME FROM RENTAL 924.99 TOTAL AGI DEDUCTIONS ( Tier I + Tier II + Tier III ) 9075.01
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