AaBbC Cassidee owns a condominium near Newport Beach in California. This year, s

Question

AaBbC Cassidee owns a condominium near Newport Beach in California. This year, she incurs the following expenses in connection with her condo: Insurance Mortgage interest Property taxes Repairs and maintenance Utilities Depreciation s 1,500 8,500 4,000 950 1,900 5,500 During the year, Cassidee rented the condo for 90 days, receiving $20,000 of gross income. She personally used the condo for 50 days. Assuming Cassidee uses the IRS method of allocating expenses to rental use of the property. What is Cassidee's net rental income for the year? Rental Income/Loss Carryover Expenses Expense Allocation Calculations MacBook Air

Explanation / Answer

Gross rental income 20,000 Tier 1 expenses: Mortgage interest = (90/140) × $8,500 = $5,464 Property taxes = (90/140) × $4,000 = $2,571 Less: total Tier 1 expenses -8035 Balance 11,965 Tier 2 expenses: Insurance = (90/140) × $1,500 = $964 Repairs and Maintenance = (90/140) × $950 = $611 Utilities = (90/140) × $1,900 = $1,221 Less: total Tier 2 expenses -2796 Balance 9,169 Tier 3 expenses: Depreciation (90/140) × $5,500 =$3,536 -3536 Net income from rental 5,633

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