During the Year, Martin Rented His Vacation Home for Three

Essay

During the year, Martin rented his vacation home for three months and spent one month there.Gross rental income from the property was $5,000.Martin incurred the following expenses: mortgage interest, $3,000; real estate taxes, $1,500; utilities, $800; maintenance, $500; and depreciation, $4,000.Compute Martin's allowable deductions for the vacation home.
Since the vacation home is rented for 15 or more days and is used for personal purposes for more than the greater of (1) 14 days or (2) 10% of the rental days, the deductions are scaled down, using the court's approach, as follows:
Thus, Martin may deduct $1,125 taxes and interest, $975 utilities and maintenance, and $2,900 depreciation against the gross income of $5,000.The personal portion of taxes and interest ($3,375) is deductible as an itemized deduction.Example 29