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How much rental expenses can she deduct for this year

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Reference no: EM132911041

Problem - Rebecca owns a condominium in Chicago with a tax basis of $298,000 at the beginning of the year. This year, she incurs the following expenses in connection with her condo:

Insurance $200

Mortgage interest 6,500

Property taxes 2,000

Advertising 500

Repairs & maintenance 6,000

Utilities 4,800

Depreciation 10,000

During the year, she lived in the condo for 50 days and rented it out the condo for 200 days. Her AGI from all sources other than the rental property is $140,000. She uses the IRS method in allocating any rental/personal expenses.

1. Assume Rebecca receives $15,000 in gross rental receipts.

(a) How much rental expense can she deduct for this year on Schedule E as deduction for AGI? Lay out the different tiers

(b) How much of the mortgage interest and property taxes can she deduct 1040-Schedule A , if any?

(c) What will be the basis of the rental property at the end of the year?

(d) Same facts as above but Rebecca only receives $5,000 in gross rental receipts. How much rental expenses can she deduct for this year as Deduction For AGI (on Sch-E)?

Reference no: EM132911041

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