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F has recently purchased a home that he intends to use as a vacation home and a rental property. He and his family use the home for 65 days during the first year of ownership. F uses a property management firm to rent the property for $50 per night for a total of 155 nights during the year. He incurs the following expenses on the property:

Interest expense $3,000
Property taxes $2,000
Maintenance $500
Property manager fees $2,500
Cleaning fees $2,500
Depreciation $3,500
Advertising $500
Insurance $300


Determine the net income or loss that F has from the property. Support your answer with a conclusion on whether the property is a residence or a rental property. If a rental property, comment on the deductibility of the loss, if any. If there are any deductions that F can use as itemized deductions, determine which ones and their amounts.

 

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