If a vacation home is determined to be a personal/rental use residence, which of the following statements is correct?
A) All rental income is included in gross income.
B) All rental related expenses that are deductible are classified as deductions from AGI.
C) Expenses must be allocated between rental and personal use.
D) Only a. and c. are correct.
E) a., b., and c. are correct.

Question

Quizplus · Accepted Answer

When a vacation home is determined to be a personal/rental use residence, rental income is included in gross income. However, expenses incurred in relation to the rental portion of the property, such as repairs and maintenance, property management fees, and advertising costs, must be allocated between rental and personal use. Only the portion related to the rental use is deductible and is classified as deductions from AGI. Therefore, Statements A and B are incorrect, and Statement C is correct. Therefore, the correct answer is D: Only A and C are correct.

If a Vacation Home Is Determined to Be a Personal/rental