Question

Natalie owns a condominium near Cocoa Beach in Florida. This year, she incurs the following expenses in connection with her condo: $4 Insurance 690 Advertising expense Mortgage interest Property taxes Repairs & maintenance Utilities 890 3,900 860 1,280 1,430 13,450 Depreciation During the year, Natalie rented out the condo for 88 days, receiving $32,500 of gross income. She personally used the condo for 48 days during her vacation. Assume Natalie uses the Tax Court method of allocating expenses to rental use of the property. Assume 365 days in the current year. (Do not round intermediate calculations. Round your final answers to the nearest whole dollar amount.) a. What is the total amount of for AGI (rental) deductions Natalie may deduct in the current year related to the condo (assuming she itemizes deductions before considering deductions associated with the condo)? For AGI deductions

Answer 1

A.

Gross rental income =$32,500

Tier 1 expenses:

Advertising expenses =$890

Mortgage interest =$3,900×(88/365) = $940

Property tax =$860×(88/365)=$207

Less: total tier 1 expenses =($2,037)

Balance=$30,463

Tier 2 expenses:

Insurance = $690×(88/136) =$446

Repairs and maintenance= $1,280×(88/136) =$828

Utilities= $1,430×(88/136)=$925

Less: total tier 2 expenses=($2,199)

Balance=$28,264

Tier 3 expenses; Depreciation $13,450(88/136)=$8,702

Less: tier 3 expenses=($8,702)

Balance net income from rental =$19,562

Total AGI deduction ($2,037+$2,199+$8,702) =$12,938

b.

Mortgage interest=$3,900×(277/365)=$2,960

Property tax=$860×(277/365)= $653

Total itemized deduction =$3,613

c.

Beginning basis =$181,000

Less: Depreciation actually deducted =($8,703)

Adjusted basis in the condo =$172,297

d.

($3,500-$2,037) =$1,463

____×___

All the best

Please do support