Problem 4-10

Rental Income and Expenses (LO 4.7)

Sherry rents her vacation home for 6 months and lives in it for 6 months during the year. Her gross rental income during the year is $6,000. Total real estate taxes for the home are $950, and interest on the home mortgage is $3,000. Annual utilities and maintenance expenses total $1,800, and depreciation expense is $4,500.

Calculate Sherry's net income (or loss) from the vacation home for this tax year.

Base allocation on number months, rather than days.