Lester rents his vacation home for 6 months and lives in the home during the other 6 months of 2016. The gross rental income from the home is $4,500. For the entire year, real estate taxes are $800, interest is $3,000, utilities and maintenance expenses are $2,000, and depreciation expense on the entire home would be $4,000. What is Lester's allowable net loss from renting his vacation home?

Annual Net Loss ($800)

Net Loss for 6 months would be $ 400

Explanation:

The gross rental income from the home is $4,500 for 6 months

For 12 months the rental income would be ($ 4500/6) (12) = $ 9000

Revenues rental $ 9000

Less Expenses

Depreciation $ 4000

Utilities and maintenance expenses $2,000

Interest $3000

Tax $ 800

Annual Net Loss ($800)

For 6 months this would be

Revenues rental $ 4500

Less Expenses

Depreciation $ 2000

Utilities and maintenance expenses $1,000

Interest $1500

Tax $ 400

Net Loss ($400)