Jeremy and Gladys own a cabin in Sun Valley,Idaho,which they rented for 30 days.They also used the cabin with their family and friends for the ski season for 45 days.Their income and expenses were as follows: rental income $4,000,mortgage interest $3,000,property taxes $2,200,utilities $400,maintenance $400,and depreciation $4,800.How much depreciation expense can they deduct on Schedule E for the cabin? Use the IRS method for allocation of expenses.

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Quizplus · Accepted Answer

The depreciation expense is allocated based on the rental use of the property. The cabin was rented for 30 days out of a total of 75 days (30 rental days + 45 personal days), so the rental portion is 30/75. The total depreciation is $4,800, so the deductible depreciation on Schedule E is $4,800 * (30/75) = $1,600.

Jeremy and Gladys Own a Cabin in Sun Valley,Idaho,which They