Question

12-25 Vacation Home Rental. S owns a condominium in Florida, which he and his family use occasionally. During the year, he used the condominium for 20 days and rented it for 40 days. The remainder of the year, the condominium was vacant. S compiled the following information related to the condominium for the entire year: $1,000 Rental income .... Expenses Interest on mortgage ........ Maintenance .... Depreciation M aintenance ...................................... .......... 3,650 900 6,000 a. Compute the tax effect of the rental activity on S. b. Assuming S only used the condominium personally for ten days, compute the tax effect. C. Assuming S only rented the condominium for 14 days, compute the tax effect

Answer 1

Enswe page :01. Given days used for condominimam = 20 days sented = 40 days Rental income = $ 1000 interest on mortage = 3650 - maintenance = 900 . depreciation = 6000 Required (a) tax effect of the stental activity on s dedertible Expenses Pinterest on mortage (.3650 * 40160)22433 maintenance exp (200 x 4060)=600 depredation (6000 x 40160)=4000 Expenses decteretible only to the extent of income 1000 Tarable rental income is o. (b) tax.effect Assuming s only used the condominimum personally for ten days

page: 02 - if the property is used for personal use for less than in days or less it it considered as a rented property Rental income - $ 1000 depreuation expenses interest on mortage = 3650 maintenance exp =-900 neuation = 6000 Total expenses deductible = 3650+400+6000 =101550 Taxable Rental income = 10550-1000 = 9550 loss to be set off with other incomes if any. (c) tax effect if thie condominimum is rented for only: 14 days it is considered as for personal use and no expenses .can be calculated,