Natalie owns a condominium near Cocoa Beach in Florida. This year, she incurs th

Question

Natalie owns a condominium near Cocoa Beach in Florida. This year, she incurs the following expenses in connection with her condo:

During the year, Natalie rented out the condo for 83 days, receiving $15,500 of gross income. She personally used the condo for 53 days during her vacation.

Assume Natalie uses the Tax Court method of allocating expenses to rental use of the property

What is the total amount of for AGI (rental) deductions Natalie may deduct in the current year related to the condo?

b. What is the total amount of itemized deductions Natalie may deduct in the current year related to the condo?

c.If Natalie’s basis in the condo at the beginning of the year was $167,000, what is her basis in the condo at the end of the year?

Natalie owns a condominium near Cocoa Beach in Florida. This year, she incurs the following expenses in connection with her condo:

Insurance $1,330   Advertising expense 700   Mortgage interest 5,700   Property taxes 1,330   Repairs & maintenance 750   Utilities 1,030   Depreciation 12,050

During the year, Natalie rented out the condo for 83 days, receiving $15,500 of gross income. She personally used the condo for 53 days during her vacation.

Assume Natalie uses the Tax Court method of allocating expenses to rental use of the property

a.

What is the total amount of for AGI (rental) deductions Natalie may deduct in the current year related to the condo?

b. What is the total amount of itemized deductions Natalie may deduct in the current year related to the condo?

c.If Natalie’s basis in the condo at the beginning of the year was $167,000, what is her basis in the condo at the end of the year?

Explanation / Answer

(a)  Total Amount of AGI deduction :

(b)Total amount of itemised deductions:

(c)

Gross $15,500 Tier 1 expenses: Advertising expenses $700 Mortgage interest (5700*83/365) 1296 Property tax(1330 *83/365) 302 Less: total tier 1 expenses ($2,298) Balance $13,202 Tier 2 expenses: Insurance (1330 *83/136) $812 Repairs & maintenance ( 750 *83/136) 458 Utilities (1030 *83/136) 629 less: total tier 2 expenses ($1,899) Balance $11,303 Tier 3 expenses: Depreciation (12050*83/136) (7354) Balance net income form rent of condo $3949 Total for AGI Deduction (2298 + 1899 +7354) $11,551

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