Tax Treatment of Rental Property in Transition

General Real Estate Investing
1

I have a rental property which I rented for 15 years, ending in mid 2004. I then made the decision to refurbish the property and put it on the market.

This work was finished in June 2005 and I put it up for sale. In September I had an offer, but it fell through. The property is still vacant and on the market.

My question is, can I still use a Schedule E to deduct my Rental Expenses, including depreciation on improvements, even though I had no rental income during 2005 and made no attempt to rent the property.

Thanks in Advance!!

2

yes.

or, you can consider your expenses as “selling expenses” and use that to reduce your gain when you sell.

any depreciation you take will be a wash when you sell.

either way, you can deduct them. after all, they ARE valid business expenses. it’s just a question of now or later.

Mark Wagner, CPA