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and (e) of section 280A. Sec. 280A(c)(3). Section 280A(c)(5)
limits deductions attributable to the rental use of such a
dwelling unit to an amount not to exceed the excess of the gross
rental income derived from the rental use over the sum of (1) the
deductions allocable to the rental use that are otherwise
allowable regardless of such rental use (such as mortgage
interest and real estate taxes) plus (2) any deductions that are
allocable to the rental activity in which the rental use of the
residence occurs, but that are not allocable to the rental use of
the residence itself. See secs. 163 and 164. Therefore, a
taxpayer who rents a portion of a dwelling unit in which he or
she also resides during the taxable year must offset rental
income first by expenses allocable to the rental use which are
otherwise allowable, such as mortgage interest and property
taxes, and then, if any rental income remains, by other expenses
related to the rental activity.
Petitioners acknowledge that the Connecticut house is
considered a "personal residence" under section 280A(d)(1),
because petitioner Kristin Ruggiero lived there for 4 months
during the taxable year 1991. Section 280A(a), therefore, is
applicable. Where section 280A(a) is applicable to a dwelling
unit for a taxable year, the provisions of section 183 do not
apply to such unit for the year. Sec. 280A(f)(3); see also
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