[startupcfo]

Adams owns a second residence that is used for both personal and rental purposes. During Year 1, Adams used the second residence for 50 days and rented the residence for 200 days. Which of the following statements is correct?

This is a WRONG answer: “A rental loss may be deducted if rental-related expenses exceed rental income.”

Why would that be? Can’t a txpayer deduct 25K in rental income losses each year if his AGI is 100K or under?

BEC - 87 | 02/28
REG - 70 | 06/10, REMATCH | 08/30
AUD - XX | 09/10
FAR - XX | 12/10

[CageTheCPA]

What were the answer options? Just curious.

[Anonymous]

Has to have something to do with the 50 days of personal use. They don't want people using their vacation homes as a tax write off.

[Spartans92]

Been a while since I saw this topic… but dont you have to prorate the usage of the residence or something?

BEC- PASS

[Anonymous]

I thought the passive income loss limit was $3,000, not $25,000…and beyond that, the 20% of used-days being personal is probably the other limiting factor.

[Hello928]

@startupcfo: Generally, Rental Real Estate activities are considered passive activities. Passive Losses are deducted up to the extent of Passive Income (Depending on AGI limitations). If you have any additional expenses above Passive Income, it will be carried forward and you can fully deduct those expenses in the year the property is disposed or sold out.

[a BEC too FAR]

Personal use is more than 14 days and more than 10% of days rented. Can't deduct the loss.

Whats the best way to take a bridge?
Both ends at once...

[startupcfo]

@a BEC too FAR,

Thanks, I see this now

https://www.law.cornell.edu/uscode/text/26/280A

no deduction otherwise allowable under this chapter shall be allowed with respect to the use of a dwelling unit which is used by the taxpayer during the taxable year as a residence.

BEC - 87 | 02/28
REG - 70 | 06/10, REMATCH | 08/30
AUD - XX | 09/10
FAR - XX | 12/10

[Author]

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