Question

Sean and Jenny own a home in Boulder City, Nevada, near Lake Mead. During the year, they rented the house for 40 days for $3,000 and used it for personal use for 18 days. The house remained vacant for the remainder of the year. The expenses for the house included $14,000 in mortgage interest, $3,500 in property taxes, $1,100 in utilities, $1,300 in maintenance, and $10,900 in depreciation. What is the deductible net loss for the rental of their home (without considering the passive loss limitation)? Use the Tax Court method for allocation of expenses.

Answer 1

Answer: 0

Explanation: Personal or rental properties aren't subjected to net loss deduction. Sean and Jenny could have chosen to rent out the property for more than 40 days or stayed in the building more than they did. The property being personal is not subject to net loss deduction resulting from mortgage payment, utility and property tax and depreciation. In other to reduce or prevent the net loss incurred in subsequent years, Sean and Jenny could probably lease or put the property up for rent for a substantial portion of the year.

Answer 2

Answer:

Answer is a i.e. 0.

Explanation:

No net loss is allowed for personal/rental properties.