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Nicolette and Brady own a cabin in Lake Arrowhead, California, that they rent out during the winter and use the rest of the year. The
Nicolette and Brady own a cabin in Lake Arrowhead, California, that they rent out during the winter and use the rest of the year. The rental property is categorized as personal/rental property, and their personal use is determined to be 68% (based on the IRS method). They had the following income and expenses for the year (after allocation):
Gross rental income | $ | 9,700 | |
Interest and taxes | 6,100 | ||
Utilities and maintenance | 2,560 | ||
Depreciation | 4,500 | ||
How much can Nicolette and Brady deduct for depreciation expense related to this property for the year on their tax return?
Multiple Choice
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$4,500.
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$1,040.
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$0.
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The answer cannot be determined.
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