Select the answer that best describes the vacation home rules.

Losses, up to $25,000, on property rented out and used as a residence may be deducted against other income.

The taxpayer may deduct expenses up to income in a specific order when they rent out a residence.

Income reported from property used personally by the taxpayer and rented out is limited to $25,000.

Nondeductible expenses carried forward due to the income limit may only be deducted in the year of disposition.