Question

Sherry rents her vacation home for 6 months and lives in it for 6 months during the year. Her gross rental income during the year is $6,000. Total real estate taxes for the home are $950, and interest on the home mortgage is $3,000. Annual utilities and maintenance expenses total $1,800, and depreciation expense is $4,500. Calculate Sherry's net income from the vacation home for this tax year.

Answer 1

Answer:

$875

Explanation:

Sherry's gross rental income $6,000

minus utilities and maintenance expenses for 6 months =$1,800 / 2 = ($900)

minus real estate taxes for 6 months = $950 / 2 = ($475)

minus depreciation expense for 6 months = $4,500 / 2 = ($2,250)

minus interest on mortgage for 6 months = $3,000 / 2 = ($1,500)

Sherry's net income is $875