Question

Thomas, a California resident, owns a summer cabin in South Lake Tahoe. During 2017,

Thomas stayed 20 days, his parents and siblings stayed 8 days and Thomas rented the 3 bedroom 3 bath cabin for 45 days, at $ 400 per day. The following expenses relate to the summer cabin:

Interest expense on debt secured by the rcabin

and incurred to acquire the cabin $14,000

Property taxes related to residence $ 9,000

Insurance $ 2,920

Utilities $ 5,840

Maintenance $ 4,380

Depreciation (calculated on entire property for this year) $10,220

How much can Thomas deduct on his Schedule E?

Answer 1

Thomas can deduct only $25000 of losses as he is actively participated.

As per Schedule E An Active participant can deduct upto $25000 losses .

Thomas has rented for 45 days at $400 per day , So he gets - 18000(45*400) income.

He has expenses as follows -

Property Tax - 9000

Interest-14000

Maintenance-4380

Utilities-5840

Insurance-2920

Depreciation is not included for deduction As it is not a expense either a income.

So thomas can decuct only $25000 On his Schedule E