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 2,000Repairs & maintenance 1,400 Utilities 2,500 Depreciation 14,500During the year, Alexa rented out the condo for 100 days. She didnot 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 ofpassive income. Assume Alexa receives $30,000 in gross rentalreceipts.
a. What effect do the expenses associated with the property haveon her AGI?
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| | | | | Grossrental income | | | | Expenses: | | | | Insurance | | | | Mortgageinterest | | | | Propertytaxes | | | | Repairs& maintenance | | | | Utilities | | | | Depreciation | | | | Less:total expenses | | 0 | | Balance—net rental income | | |
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b. What effect do the expenses associated withthe property have on her itemized deductions?
