Girardo owns a condominium in Key West.During the year,Girardo uses the condo a total of 22 days.The condo is also rented to vacationers for a total of 78 days and generates rental income of $24,000.Girardo incurs the following expenses before allocation:

The amount of depreciation that Girardo may deduct with respect to the rental property is
A)$7,300
B)$9,960
C)$14,040
D)$17,160
E)$22,000

Question

Girardo owns a condominium in Key West.During the year,Girardo uses the condo a total of 22 days.The condo is also rented to vacationers for a total of 78 days and generates rental income of $24,000.Girardo incurs the following expenses before allocation:
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The amount of depreciation that Girardo may deduct with respect to the rental property is
A)$7,300 
B)$9,960 
C)$14,040 
D)$17,160 
E)$22,000

Quizplus · Accepted Answer

Girardo can only deduct depreciation for the portion of time that the condo was used as a rental property. Since it was rented for 78 days out of the year and he used it for 22 days, the rental/use percentage is 78/(78+22)=78%. Therefore, he can deduct 78% of the annual depreciation, which is ($400,000/27.5 years) x 78% = $9,960.

Girardo Owns a Condominium in Key West