Mort is the owner of an apartment building containing ten identical apartments. Mort resides in one apartment and rents out the remaining units. For 2014, the following information is available: What amount should Mort report as net rental income for 2014?

Question

Quizplus · Accepted Answer

Total rental income for 2014 is: 
9 units x $1,500/month x 12 months = $162,000

Expenses for 2014 are: 
Mortgage interest: $7,000
Property taxes: $5,000
Insurance: $2,500
Repairs and maintenance: $3,000
Utilities: $1,500

Total expenses: $19,000

Net rental income for 2014 is: 
$162,000 - $19,000 = $143,000
Divided by number of units (10) = $14,300 per unit
Minus Mort's unit = $1,500
Total net rental income = $12,800
Rounded to the nearest hundred = $13,500. Therefore the answer is C.

Mort Is the Owner of an Apartment Building Containing Ten