Question

Amy rents her vacation home for 30 days (1 month) but she used the home for personal use for 5 days. She had $15,000 of rental income. The mortgage interest expense for the year was $12,000 and the real estate taxes were $6,000. The expenses allocable to the rental period were $5,000 and 1 year’s depreciation is $12,000. How much taxable income, if any did the rental produce? What expenses, if any may be carried forward?

Answer 1

Income or loss from house property

Income from Self occupied house property (5 days out of 30 days = 1/6)

Revenue from self occupied nil

Less: int on loan 12000*1/6 ( 2000)

Loss from self occupied property Is $ 2000/- can be set off from income from any other head during the year or otherwise Carried forward and set off from next 8 year from house property income.

Income from let out property (25 days out of 30 days = 5/6)

Actual rent received 15000

Less Standard deduction 30% 4500

Taxes 6000

int on loan (12000*5/6) 10000 20500

loss from let out property 5500

This loss can be set off from income from any other property income during the year or therwise it can be carried forward to next 8 year and set off from house property income only.