Nathan owns a tri-plex in Santa Maria,California.He lives in one and rents the other two remaining units.All three units are identical.He incurred the following expenses for the entire building: $4,000\begin{array}{lr}\text { Mortgage interest } & \$ 20,000 \\\text { Maintenance } & 6,200 \\\text { Property taxes } & 9,000 \\\text { Utilities } & 5,000 \\\text { Depreciation } & 4,000\end{array}$ How much in rental expenses can Nathan deduct against the rental income on a Schedule E in the current year (without considering any passive loss limitations) ? (Round your answers to the nearest whole dollar)

A) $14,733
B) $20,000
C) $29,467
D) $44,200

Question

Nathan owns a tri-plex in Santa Maria,California.He lives in one and rents the other two remaining units.All three units are identical.He incurred the following expenses for the entire building:

4,000\begin{array}{lr}\text { Mortgage interest } & \$ 20,000 \\\text { Maintenance } & 6,200 \\\text { Property taxes } & 9,000 \\\text { Utilities } & 5,000 \\\text { Depreciation } & 4,000\end{array}

How much in rental expenses can Nathan deduct against the rental income on a Schedule E in the current year (without considering any passive loss limitations) ? (Round your answers to the nearest whole dollar)

A) $14,733
B) $20,000
C) $29,467
D) $44,200

Zybrea Knight · Accepted Answer

Final Answer : C, Explanation :   Nathan can deduct expenses related to the rental portions of his property. Since he lives in one unit and rents out the other two, two-thirds of the expenses are deductible against rental income. The calculation is as follows:   ( $ 20 , 000 + $ 6 , 200 + $ 9 , 000 + $ 5 , 000 + $ 4 , 000 ) × 2 3 = $ 29 , 467 (\$20,000 + \$6,200 + \$9,000 + \$5,000 + \$4,000) 	imes \frac{2}{3} = \$29,467 ( $20 , 000 + $6 , 200 + $9 , 000 + $5 , 000 + $4 , 000 ) × 3 2 ​ = $29 , 467  .

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