Question

Sherry rents her vacation home for 6 months and lives in it for 6 months during the year. Her gross rental income during the year is $6,000. Total real estate taxes for the home are $950, and interest on the home mortgage is $3,000. Annual utilities and maintenance expenses total $1,800, and depreciation expense is $4,500. Calculate Sherry's net income (or loss) from the vacation home for this tax year. If an amount is zero, enter "0". Base allocation on number months, rather than days. Rental income $ Expenses: Real estate taxes $ Mortgage interest Utilities and maintenance Depreciation Net rental income (loss) $

Answer 1

If used as a home and rented for 15 days or more during the year, treat as personal+rental residence.

* Rental income included on Schedule E and pro-rata rental expenses deductible on Schedule E.

- Mortgage interest and property tax deductible on Schedule E for the period rented.

- Property expenses (utilities, insurance, depreciation) pro-rate between personal and rental use (portion allocated to rental use is deductible on Schedule E)

* Net rental loss (if any) is carried-forward to future years.

	Rental (Schedule E)
Gross rental income	6,000
less : Mortgage interest and taxes for period rented (6/12)
Taxes (950*6/12)	(475)
Interest (3,000*6/12)	(1,500)
Less : Property expenses prorated between rental and personal use (6/12)
Utilities and maintainance (1,800*6/12)	(900)
Depreciation (4,500*6/12)	(2,250)
Net rental income	875