Rental Property

[S T]

I have a tax client that has had a rental property for over 6 years, and due to the market, has tried to sell it, or rent it and cannot (started late 2007). No income for 2007, just expenses.

Due to passive loss rules and his income, I have prior year unallowed Losses on 8582.

Question for 2008, do I continue to report on Schedule E and let additional losses accumulate, or suspend the rental and change the property to investment property, deduct the property tax on Schedule A, and either use the mortgage interest as Investment Interest, or Capitalize it?

Thanks

Sandy

[Jesse]

Did he take it off the rental market? If not and it's available for rent I would continue to report on Schedule E and let additional losses accumulate.

[S T]

Vacant

Property is still vacant, and now the client just informed me that they ceased making the mortgage payments in November 08.

Now what?

Sandy