Mario owns a home in Park City,Utah,that he rented for $1,600 for three weeks during the summer.He lived there for a total of 120 days and the rest of the year the house was vacant.The expenses for the home included $6,000 in mortgage interest,$900 in property taxes,$1,300 in maintenance and utilities,and $3,500 in depreciation.How much net rental income or loss from the Park City home would Mario report for the current year? Use the IRS method for allocating expenses.

Question

Quizplus · Accepted Answer

To calculate the net rental income or loss, we first allocate the expenses between rental and personal use based on the number of days used for each. The house was rented for 21 days and used personally for 120 days, totaling 141 days of use. The rest of the year, it was vacant, so these days don't count towards expense allocation.Rental expense allocation = Total expenses * (Rental days / Total days of use)Total expenses = $6,000 (mortgage interest) + $900 (property taxes) + $1,300 (maintenance and utilities) + $3,500 (depreciation) = $11,700Rental days = 21Total days of use = 141Rental expense allocation = $11,700 * (21 / 141) = $1,600Mario earned $1,600 from renting the house, which exactly matches the allocated rental expenses. Therefore, Mario would report $0 net rental income or loss from the Park City home for the current year.

Mario Owns a Home in Park City,Utah,that He Rented for $1,600