Question

The matthews purchased a rent house on january 2 of the current year for $200,000 ($140,000 allocated to the structure and $60,000 allocated to the land). the address is 100 drew street, houston, tx 77006. they immediately rented it and have the following income and expenses for the current year: rental income received ($700 x 12) $8,400 mortgage interest 7,900 real estate taxes 3,120 2 maintenance expense 980 homeowner's insurance 2,190 repair expense 1,450 the matthews actively participated in the management of the rent house but they do not qualify as real estate professionals. the rental activity is not a qualified trade/business.

Answer 1

The Matthews' rent house financial situation includes a purchase price of $200,000, annual rental income of $8,400, and expenses totaling $15,640. The analysis of such financial decisions is part of understanding monetary value, homeownership, and asset management in business and personal finance.

Step-by-step explanation:

The Matthews bought a rent house for a total purchase price of $200,000, which includes $140,000 for the structure and $60,000 for the land. Over the course of the year, they received $8,400 in rental income and had various expenses totaling $15,640, which included mortgage interest, real estate taxes, maintenance expenses, homeowner's insurance, and repair expenses.

Homeownership is a significant financial decision and often contributes to a person's monetary value. An individual's equity in a house is essentially the market value of the home minus any outstanding bank loans used for the purchase. This is often the single greatest asset for many Americans. Decisions around renting out an owned property and managing it can provide a return on investment and influence one's overall financial situation.

Regarding the specific figures provided:
- Rental Income: $8,400 ($700 x 12 months)
- Mortgage Interest: $7,900
- Real Estate Taxes: $3,120
- Maintenance Expense: $980
- Homeowner's Insurance: $2,190
- Repair Expense: $1,450