Vacant Rental Property

Today TaxMama hears from Ed in the TaxQuips Forum who wants to know. “Can I still deduct my expenses on a rental house which sat vacant for 2010 on Schedule E?” 

 Mike Emeigh, the NC TaxPro, answers Ed, saying, if the house was available for rent, and you tried to rent it, then you can claim your expenses on Schedule E even if you had no income from the property.

You should pay attention to the not-for-profit activities section of Publication 535 because if you carry losses on the rental house for too long the IRS might start to question whether it’s really a for-profit rental.

These days, properties often do take longer to rent out, and sit vacant for longer periods of time. So TaxMama® adds some additional guidance – be sure you can prove you had the house up for rent. Keep copies of ads (and the payments for those ads) and any other means you used to try to get a tenant. Real estate listings, MLS, etc.  

If you did nothing, or only ran free ads that disappear in the noise, IRS will not take you seriously as a rental property owner. Your property will fall under the hobby loss rules, or personal property, rather than rental property.  Sorry.

 So…Ed and anyone else in that situation – start keeping records of your efforts to rent your vacancies.

And remember, you can find answers to all kinds of questions about vacant rentals and other tax issues, free. Where? Where else? At www.TaxMama.com.

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