Question

Rhonda rented her vacation home for 30 days when the Winter Olympics were held in the city. She received rent revenue was $6,000 which was a fair rental rate during this tourist season. She lived in the home 30 days. She paid a total of $7,300 for taxes and mortgage interest on the home. She paid utility expense and repair expense totaling $4,000. Total depreciation on the home is $8,000 per year. How much depreciation expense will she report on Schedule E for this rental property for 2019?

Group of answer choices $3,000 $7,400 $3,400 $2,400

Answer 1

As per Depreciation of Rental Property of schedule E Three factors determine how much depreciation you can deduct each year: (1) your basis in the property, (2) the recovery period for the property, and (3) the depreciation method used. You can’t simply deduct your mortgage or principal payments, or the cost of furniture, fixtures, and equipment, as an expense. You can deduct depreciation only on the part of your property used for rental purposes. Depreciation reduces your basis for figuring gain or loss on a later sale or exchange.

You can depreciate your property if it meets all the following requirements. • You own the property. • You use the property in your business or income-producing activity (such as rental property). • The property has a determinable useful life. • The property is expected to last more than one year. Property you own. To claim depreciation, you must usually be the owner of the property. You are considered to be the owner of property even if it’s subject to a debt.

Depreciation Methods Generally, you must use the Modified Accelerated Cost Recovery System (MACRS) to depreciate residential rental property placed in service after 1986. If you placed rental property in service before 1987, you are using one of the following methods. • Accelerated Cost Recovery System (ACRS) for property placed in service after 1980 but before 1987. • Straight line or declining balance method over the useful life of property placed in service before 1981.

As per given question House property is available for rent ( Service activity) for an year except 30 days were Rhonda is stayed in home she can claim for remaining period for dereciation expenses on schedule E

Total depreciation on the home is $8,000 per year. propotinatly for 11 months i.e $ 7400

depreciation expense $ 7400 she can report on Schedule E for this rental property for 2019