Question

Sean and Jenny own a home in Boulder City, Nevada, near Lake Mead. During the year, they rented the house for 40 days for $3,000 and used it for personal use for 18 days. The house remained vacant for the remainder of the year. The expenses for the house included $14,000 in mortgage interest, $3,500 in property taxes, $1,100 in utilities, $1,300 in maintenance, and $10,900 in depreciation. What is the deductible net loss for the rental of their home (without considering the passive loss limitation)

Answer 1

Sean and Jenny

The deductible net loss for the rental of their home is:

= $18,241.

Step-by-step explanation:

a) Data and Calculations:

Number of days for rent of $3,000 collected = 40 days

Number of personal use of house = 18 days

Total number of days that the house was in use = 58 days

House Expenses:

Mortgage interest $14,000

Property taxes 3,500

Utilities 1,100

Maintenance 1,300

Depreciation 10,900

Total expenses $30,800

Proportion of house expense:

Rental use = $21,241 (40/58 * $30,800) 69%

Personal use = $9,559 (18/58 * $30,800) 31%

Total expense $30,800

The deductible net loss for the rental of their home is $18,241 ($3,000 - $21,241).