Rental property

[oceanlovin'ea]

Client bought a condo in 2005 that was originally an investment that he intended to resell. But market went down and he ended up renting out the condo instead.
This year he had it rented for 5 months. Then tenants moved out. Someone stole the air conditioning unit outside the house. He couldn't afford to replace the unit. So it is not available to rent for the rest of the year. Can't rent a house in Florida without A/C.

He is still trying to sell it. But can't get appraisal without replacing the a/c and banks won't finance without appraisal or replacing the a/c. He is trying to find someone to buy it for cash.

My question is about the depreciation and mortgage interest. Do I take just 5/12 of those figures on the Schedule E?

Anyone got $90,000 cash to buy a condo in Florida? When he bought it, it was worth around $200,000. Now the bank will sell it for $90,000. What a deal!

Linda

[DTS]

Anyone got $90,000 cash to buy a condo in Florida? When he bought it, it was worth around $200,000. Now the bank will sell it for $90,000. What a deal!

I would, but not without the a/c unit!

[AJsTax]

rental

The mortgage interest would be deductible on Sch A as investment property or second home anyway, so usually a percentage on the Sch E in relation to actual use makes sense. You continue to deduct depreciation on a temporarily idle property. Is this considered temporary? I don't know. But it would sure make the work a lot easier at the time of the sale if the depreciation was taken as allowed.
So my reaction at this point would be to take the depreciation because it has not been converted back to personal use property.

[JG EA]

Would this fall under property placed in service and disposed of in the same year?
An idea: what about carrying the interest/taxes with an election to hold for basis when it sells instead of investment interest?

[taxea]

In order to continue to take the depreciation while unoccupied the unit has to be "available for rental".

This is Sch E for income and expenses purposes with a theft loss.

I can't believe absolutely no one will rent without the A/C. Doesn't FL have Section 8 availability? taxea

[WhiteOleander]

Trying to figure out how the get another a/c unit.

If the prior tenant stole it, didn't he have insurance to cover that? Then he would have funds to replace it.

Also, my husband used to do hvac. Sometimes the companies have good used units that they took out from another place. Nothing wrong with the unit. It just wasn't appropriate where it was initially installed. Maybe he could get a good deal on a used unit.

Ok, back to our originally scheduled topic

[AJsTax]

Quote from pub

In order to continue to take the depreciation while unoccupied the unit has to be "available for rental".

taxea

Quote from Pub 946 (for whatever that is worth!)
"Continue to claim a deduction for depreciation on property used in your business or for the production of income even if it is temporarily idle (not in use)."

Who is to say it is not available for rent, even though most do not want to rent it without A/C? I stand by what I said before, continue to depreciate it until it is sold or returned to service (at which time the issue will be moot.)

[oceanlovin'ea]

more info

He dropped the insurance. Not sure why. But no insurance when unit was stolen.

The condo is in foreclosure, has been for several months but nothing has happened yet.

He has it listed for a short sale.

I'll take part of the mortgage interest on the schedule E and the rest on the A.

Since it is in foreclosure, I don't think renting it out is a good idea. Renters might have to move right after moving in.

Thanks

Linda