May owns a four-plex in Garden Grove,CA.She rents out 3 units and lives in the fourth.Her income and expenses for the entire four-plex are as follows: mortgage interest $8,200,property taxes $9,000,insurance $3,000,utilities $2,000,repairs and maintenance $1,000,depreciation on the entire complex of $5,000,and rental income of $25,000.What amount of net rental income or loss should May report on her current tax return?
A)$3,200 net loss
B)$3,850 net income
C)$21,150 net loss
D)$25,000 net income

Question

Quizplus · Accepted Answer

To determine the net rental income, we subtract the total expenses from the rental income:

$25,000 (rental income) - $8,200 (mortgage interest) - $9,000 (property taxes) - $3,000 (insurance) - $2,000 (utilities) - $1,000 (repairs and maintenance) - $5,000 (depreciation) = $3,850 net income.

Therefore, the correct answer is B, $3,850 net income.

May Owns a Four-Plex in Garden Grove,CA