Question

donald rents out his vacation home for 9 months and lives in his vacation home for the remainder of the year. his gross rental income for 2022 is $7,200. the expenses attributable to the vacation home for the entire year are as follows:real estate taxes$2,000interest on mortgage loan4,000utilities1,200repairs/maintenance600depreciation3,500what amount would donald report as net income or loss from the rental of the vacation home?

Answer 1

Donald would report a loss of $4,100 from the rental of his vacation home for the year 2022 after subtracting total expenses of $11,300 from his gross rental income of $7,200.

Step-by-step explanation:

To calculate the net income or loss from the rental of Donald's vacation home, we must first total the expenses, and then subtract this amount from the gross rental income. The expenses include real estate taxes, interest on mortgage loan, utilities, repairs/maintenance, and depreciation, totaling $11,300. Then, we subtract these expenses from the gross rental income of $7,200 to determine the net income or loss.

Here is the math:

• Real estate taxes: $2,000
• Interest on mortgage loan: $4,000
• Utilities: $1,200
• Repairs/maintenance: $600
• Depreciation: $3,500
• Total expenses: $2,000 + $4,000 + $1,200 + $600 + $3,500 = $11,300
• Gross rental income: $7,200
• Net income/loss: $7,200 - $11,300 = -$4,100 (loss)

Therefore, Donald would report a loss of $4,100 from the rental of the vacation home for the year 2022.