Individual Taxpayer T (T) owns a rental home which T used for personal use for 20 days
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Question:
- Individual Taxpayer T ("T") owns a rental home which T used for personal use for 20 days and rented for 220 days during the year. T's rental income, from the home, was $32,000 and total expenses were as follows: (i) Mortgage Interest $18,000, (ii) Real Estate Tax $6,000, (iii) Utilities $6,000, and (iv) Depreciation $12,000. A tax consequence to T is:
- T may recognize net losses of ($10,000) on T's individual income tax return
- T may recognize net losses of ($6,500) on T's individual income tax return
- T will recognize net income / loss of $0 and no carryovers
- T will recognize net income / loss of $0 and $10,000 of loss that will carry forward to the following tax year
- T will recognize net income / loss of $0 from the rental property, and will be able to deduct $1,500 of mortgage of interest on T's individual income tax return, assuming T uses the court test
Can you explain how the answer is 2? I can not understand it. Please do it step by step, with out skipping anything. I assume its about vacation rules.
Related Book For
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
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