Expenses associated with a rental property must be allocated between rental and personal use, and any allocable rental expenses are allowed in full to offset any rental income.
Come tax time, this has usually left taxpayers scrambling to summarize any costs that are indirectly allocable to their home office, including utilities, homeowners insurance, repairs, mortgage interest, or real estate taxes.
The reason it did not have to was that Mr. Norman was unable to substantiate how much of the debt was allocable to the portion of the property that he wanted to carve off.
When Section 280A was enacted in the mid-1970s for the purpose of limiting expenses allocable to the rental use of a residence, a group of powerful people who had previously been able to rent their homes on a short-term basis for gobs of cash some of whom hailed from Augusta Georgia, home to the Masters lobbied Congress to be able to keep their tax-free windfall.