Robyn rents her beach house for 60 days and uses it for personal use for 30 days during the year.The rental income is $6,000 and the expenses are as follows:

Using the IRS approach,total expenses that Robyn can deduct on her tax return associated with the beach house are:
A)$0.
B)$6,000.
C)$8,000.
D)$12,000.
E)None of the above.

Question

Robyn rents her beach house for 60 days and uses it for personal use for 30 days during the year.The rental income is $6,000 and the expenses are as follows:
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Using the IRS approach,total expenses that Robyn can deduct on her tax return associated with the beach house are:
A)$0. 
B)$6,000. 
C)$8,000. 
D)$12,000. 
E)None of the above.

Quizplus · Accepted Answer

According to the IRS approach, Robyn can deduct expenses that are directly related to renting the beach house (such as advertising, cleaning, maintenance, and repairs), as well as a portion of expenses that are indirectly related to renting the beach house (such as property taxes, mortgage interest, and utilities). Since Robyn rented the beach house for 60 days out of the year and used it for personal use for 30 days, she can deduct 2/3 of the indirect expenses associated with the property. Therefore, her total deductible expenses would be $18,000 (2/3 of $27,000). However, since the rental income was only $6,000, Robyn could only deduct up to $6,000 of those expenses on her tax return. So the correct answer is D) $12,000 (the total deductible expenses minus the rental income).

Robyn Rents Her Beach House for 60 Days and Uses