Exam 14: Tax Consequences of Home Ownership

Which of the following statements regarding the IRS and/or Tax Court approaches to allocating home-related expenses between rental use and personal use is correct?

Several years ago,Chara acquired a home that she vacationed in part of the time and she rented part of the time.During the current year Chara: -Personally stayed in the home for 14 days, -Rented it at full fair market value to her parents for eight days, -Rented it to her sister for five days at half price, -Rented it to her friend at a discounted rate for three days, -Rented it to another friend at fair market value for six days, -Rented the home to third parties for 42 days at the market rate, -Did repair and maintenance work for three days to keep the home ready for renters,and -Marketed the property and made it available for rent for 120 days during the year even though it was not rented during this time. How many days of personal use and how many days of rental use did Chara experience on the property during the year?

A taxpayer can qualify for the home sale exclusion even if she has moved out of the home and is renting the home to another at the time of the sale.

For tax purposes a dwelling unit is a residence if the taxpayer's number of personal-use days of the unit is more than 10 days.

Shantel owned and lived in a home for five years before marrying Daron.Shantel and Daron lived in the home for two years before selling it at a $700,000 gain.Shantel was the sole owner of the residence until it was sold.How much of the gain may Shantel and Daron exclude?

When a taxpayer experiences a net loss from a nonresidence (rental property):

Which of the following statements regarding the break-even point for paying discount points in order to get a lower interest rate on the loan is correct?

Taxpayers are allowed to deduct real property taxes at the time they pay estimated real property taxes to an escrow account established by the lender for the taxpayer's property taxes.