Asked by Bui Huyen Trang (K13_HN) on Jun 21, 2024
Verified
Explain the three categories that a rental activity may fall under if used for both personal and rental purposes.How are the categories determined?
Personal/Rental
Refers to properties or items that are used both for personal purposes and rented out for income, requiring specific tax treatment for the income and expenses.
Rental Activity
Engaging in leasing out property as a business or investment, generating income from tenants paying rent.
- Discern between the personal and rental applications of property and apprehend the implications on taxes.
Verified Answer
JA
Jonathan AbrahamJun 22, 2024
Final Answer :
Rental property can be categorized as primarily rental use,primarily personal use,and personal/rental use.The categorization depends on the number of rental days compared to the number of personal days the rental property was used.When property is rented for less than 15 days,the property is considered primarily personal.If the property is used personally for no more than 14 days (or 10% of total rental days)and rented for 15 days or more,the property is considered primarily rental.Lastly,if the property is rented for 15 days or more,and personal use exceeds the greater of 14 days or 10% of total days rented,then the property is categorized as personal/rental.
Learning Objectives
- Discern between the personal and rental applications of property and apprehend the implications on taxes.
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