Question

Mr. Moyer owns residential rental property. This year, he received $7,000 revenue from the tenants and incurred $4,900 rental expenses. Mr. Moyer must include $7,000 in gross income and is allowed $4,900 of itemized deductions for the expenses.

a. True

b. False

Answer 1

That is correct. Mr. Moyer is required to report the $7,000 rental revenue on his tax return as gross income. However, he can reduce his taxable income by deducting the allowable rental expenses of $4,900. Therefore, his net rental income for the year would be $2,100 before any other applicable deductions or credits.