Question

Alexa owns a condominium near Cocoa Beach in Florida. This year, she incurs the following expenses in connection with her condo: Insurance $ 2,000 Mortgage interest 6,500 Property taxes 2,000 Repairs & maintenance 1,400 Utilities 2,500 Depreciation 14,500 During the year, Alexa rented out the condo for 100 days. She did not use the condo at all for personal purposes during the year. Alexa’s AGI from all sources other than the rental property is $200,000. Unless otherwise specified, Alexa has no sources of passive income. Assume Alexa receives $30,000 in gross rental receipts.

a. What effect do the expenses associated with the property have on her AGI?

	Gross rental income Expenses: Insurance Mortgage interest Property taxes Repairs & maintenance Utilities Depreciation Less: total expenses 0 Balance—net rental income

b. What effect do the expenses associated with the property have on her itemized deductions?

Answer 1

	Particulars	Amount($)
1	Gross Rental Income	30000
2	Expenses:
	Insurance	-2000
	Mortagage Interest	-6500
	Property Taxes	-2000
	Repairs & Maintenance	-1400
	Utilities	-2500
	Depreciation	-14500
	Total	28900
3	Balance-Net Rental Income(1-3)	1100

a. What effect do the expenses associated with the property have on her AGI?

                               Alexa is a non resident , The rental income as a whole belongs to property income because she doesn’t use for her personal purpose and so The expenses incurred are fully deductible as a result it reduces the total rental income by $28900 and Aggregate total income is increased by $1100

b. What effect do the expenses associated with the property have on her itemized deductions?

Ans:Alexa is not used rental property for his personal purpose for any number of days so the expenses incurred is wholly deductible under rental income and It doesn’t impact on itemized deductions.