Question

An Excel spreadsheet using formulas and cell referencing is required for this assignment.

Careen owns a condominium near Hershey, PA that she rents out part of the year. This year, she incurs the following expenses in connection with her rental condo:

Mortgage Interest	$9,490
Property Taxes	6,570
Insurance	3,220
Repairs and maintenance	1,610
Utilities	3,703
Depreciation	11,270

  
During the year, Careen rented the condo for 112 days, receiving $17,600 of gross income. She personally used the condo for 49 days. Assuming Careen uses the court method of allocating expenses to rental use of the property.

She files single and in addition to expenses listed above, she paid the following amounts:

home mortgage interest on her personal residence	$7,400
property taxes on her personal residence	5,000
state income taxes	3,000
charitable contributions	4,400

Remember that for itemized deductions (from AGI) the deduction for state taxes is limited to $10,000.

Determine how much depreciation she is allowed to deduct. Then determine her net rental income (loss), her total amount of “for AGI” deductions, and her total amount of itemized deductions (from AGI). Include and fill in the following table within your Excel worksheet:

Depreciation Deducted
Net Rental Income (Loss)
Total for AGI Deductions
Total Itemized (from AGI) Deductions

Answer 1

Depreciation Dedcuted $ 4,686

Net Rental Income (Loss) $ 2,050

Total for AGI Deductions $ 9,082

Total Itemized $ 15,530

Under the Court Method we would allocate taxes and interest based on days rented divide by 365 days.

when rental property is classified as a vacational home, Depreciation can be deducted only to the extent of the Net rental income from the property Minus "allocable portion of mortagage interest and Taxes".

Rented 112 days

Personal use 49 days

Rental Income $17,600

Less:- Deductions:-

1.Interest and Taxes $ (4,928)

(9490+6570*112/365)

2.Insurance $ (2,240)

(3220*112/112+49)

3.Repairs & Maintenance $ (1,120)

(1610*112/112+49)

4.Utilities $ (2,576)

(3703*112/112+49) -----------------

Income before deduction for depreciation $ 6,736

(17,600-4,928-2,240-1,120-2,576)

Less:- Depreciation $ (4,686)

(6736*112/112+49) ---------------

Net Rental Income $ 2,050

Deduction for interest and taxes $ (11,132)

(9490+6570+4928) ----------------

Total Reduction in Income(AGI Deductions) $ (9082)

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Total Itemized Deductions:-

mortagage interest $ 9,470

Property Taxes $ 6,570

Insurance $ 2,240

Repairs & Maintenance $ 1,120

Utilities $ 2,576

Depreciation $ 4,686

---------------

Total Itemized Deductions $ 26,662

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