Kelvin owns and lives in a duplex. He rents the other unit for $750 per month....
Kelvin owns and lives in a duplex. He rents the other unit for $750 per month. He incurs the following expenses during the current year for the entire property:
| Mortgage interest | $7,500 |
| Property taxes | 2,000 |
| Utilities | 1,500 |
| Fixed light fixture in rental unit | 100 |
| Fixed dishwasher in personal unit | 250 |
| Painted entire exterior | 1,300 |
| Insurance | 1,800 |
| Depreciation (entire structure) | 7,000 |
How are these income and expenses reported on Kelvin’s tax return? On what tax form(s) are these amounts reported?
Homework Answers
ANSWER
| Personal | SCHEDULE A | SCHEDULE E | |
| INCOME | 9000 | ||
| MORTGAGE INTEREST | 3750 | 3750 | -3750 |
| PROPERTY TAXES | 1000 | 1000 | -1000 |
| UTILITIES | 750 | N/D | -750 |
| FIX LIGHT (RENTAL) | -100 | ||
| FIX DISHWAHER | 250 | N/D | |
| PAINT EXTERIOR | 650 | N/D | -650 |
| INSURANCE | 900 | N/D | -900 |
| DEPRECIATION | 3,500 | N/D | -3,500 |
| $4750 | -1650 | ||
| The $4,750 of personal expenses for taxes and interest are deductible as itemized deductions (see Chapter 5). | |||
| The other personal expenses are non-deductible.The rental loss of $1,650 is deductible subject to the passive loss rules (Chapter 13). | |||
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Kelvin owns and lives in a duplex. He rents the other unit for
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