no 25K deduction for rental property activity?

  • Creator
    Topic
  • July 10, 2016 at 2:50 pm #203557
    startupcfo
    Participant

    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?

    AUD - 93
    BEC - 87
    FAR - 77
    REG - 77
    ------------
    Corporate finance leader

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

Viewing 7 replies - 1 through 7 (of 7 total)
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  • July 10, 2016 at 3:00 pm #786113
    CageTheCPA
    Participant

    What were the answer options? Just curious.

    B - 81

    A - 80

    R - 75

    F - 83

    July 10, 2016 at 3:19 pm #786114
    Anonymous
    Inactive

    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.

    July 10, 2016 at 3:36 pm #786115
    Spartans92
    Participant

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

    BEC - 76
    REG- 67, 85
    AUD-63, 74, 80!!
    FAR-65, 62, 57, 79

    3 down 1 more to go. BEC is on the Line 🙁

    BEC- PASS

    July 10, 2016 at 3:57 pm #786116
    Anonymous
    Inactive

    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.

    July 10, 2016 at 4:12 pm #786117
    Hello928
    Participant

    @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.

    July 10, 2016 at 7:40 pm #786118
    a BEC too FAR
    Participant

    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...

    August 25, 2016 at 8:20 am #820425
    startupcfo
    Participant

    @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.

    AUD - 93
    BEC - 87
    FAR - 77
    REG - 77
    ------------
    Corporate finance leader

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

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