Bill is the owner of a house with two identical apartments.He resides in one apartment and rents the other apartment to a tenant.The tenant made timely monthly rental payments of $500 per month for the months of January through December,2013.The following expenses were incurred on the entire building: $\begin{array}{lr}
\text { Utilities } & \$ 3,600 \
\text { Maintenance and repairs } & \$ 800 \
\text { Insurance on building } & \$ 600
\end{array}$ In addition,depreciation allocable to the rented apartment is $1,500.What amount should Bill report as net rental income for 2013?

Question

Quizplus · Accepted Answer

The net rental income is calculated as total rental income minus expenses related to the rented apartment. Rental income is $500 x 12 = $6,000. Expenses for the rented apartment are half of the total building expenses: Utilities $1,800, Maintenance $400, Insurance $300, plus Depreciation $1,500. Total expenses = $4,000. Net rental income = $6,000 - $4,000 = $2,000.

Bill Is the Owner of a House with Two Identical