A several of years ago I inherited a mobil home and an appraisal set the value , its about 2x the present market value.
I started renting it out, reported everything on tubo tax, income , depreiciation, etc.
Early last year i had enough of the headaches, after tenant moved out I used the rest of the year, and till present day, to repair it. Later this year I plan on selling it and the tax loss on it is the motivation. I see littel hope of appreciatin in near future, older mobil home is of little value. The land is its main value, it is not in a trailer park, i own the land.
My question is this, turbo tax seems bothered I only have a couple months rent, and ask if I activelty tried to rent it out. Is answering yes to that important to being able to take the tax loss?
So In general, can’t I just choose to buy an investment properyt, let it set empty, and then sell it and report the profit or loss without trying to rent it out? what if it was just land?
thanks
I tried it, and it said I should completely remove the property. and keep records for future if I should ever sell or return it to rental status. nobody said it was fair, but it seems like I should be able to deduct cost of taxes, upkeep, etc of an investment propery even if i choose not to rent it out. but that is what turbo tax is telling me.
As long as it remained as an investment property and was not being used as a “vacation” home or hunting cabin then you can deduct the losses (from what I understand of the tax laws). This is especially true since you were renovating the home and thus were unable to rent during that time. In my opinion, renovating a property in order to either rent or sell it would be classified as actively involved in an investment property.
The problem you are having with TurboTax is that it appears that you took the property out of service as a rental. By your own statement, and reading between the lines, you got tired of the rental headaches and began a renovation so you could sell the property. Your renovation costs are adjustments to basis, so you won’t be able to expense them even if you were still operating a rental property.
It appears you have no intent to keep using the property as a rental. You still have an investment property, just not a rental property. You should report that you took the property out of service. Depending upon your specific circumstances, you may be able to claim the property tax and and mortgage interest on Schedule A if you itemize. Consult your accountant for specific details. Be aware that the maximum net capital loss you can claim on your 1040 is $3000. Losses over that are carried forward to next year.