Abandon Rental House

[Brian EA]

Tax payer did not make any mortgage payments nor did he have any tenants for all of 2009. The property has not been foreclosed as yet. He would like to claim the depreciation and carry forward loss .
Any advice
brian

[BOB W]

Tax payer did not make any mortgage payments nor did he have any tenants for all of 2009. The property has not been foreclosed as yet. He would like to claim the depreciation and carry forward loss .
Any advice
brian

It seems to me that the rental is no longer rental property. Until the property is sold or repoed he is still the owner and nothing can be deducted. As far as abandoment goes, what was done offically to claim abandoment ????

[Brian EA]

It seems to me that the rental is no longer rental property. Until the property is sold or repoed he is still the owner and nothing can be deducted. As far as abandoment goes, what was done offically to claim abandoment ????

If he is still the owner why can't he claim the losses. Nothing offically was done to claim abandonment.
brian

[taxmom34]

in order to even use the schedule E, doesn't the property have to be "available for rent?

[Kram BergGold]

To rent or not to rent

Was the landlord trying to rent the place? If landlord has proof of advertisements or it the property was advertised for sale then I would continue Schedule E. If landlord was neither trying to sell it , nor advertising it for rnet then it is now an investment property and all deductions go on Schedule A. This assumes landlord had not started using the property for personal purposes.

[Brian EA]

He claims that the property was available for rent. He has no bills of any kind. He just let the property go and now wants to claim depreciation and the carry forward losses. My answer is that he did nothing to the property and cannot claim any deductions.
brian

[taxea]

If he can prove that the property was available to rent...copy of advertisement or other document then I would say he can justify the deduction...if not I wouldn't chance it the depreciation and other expense should stop the last day it was occupied by a tenant.

[AJsTax]

IRS says to continue

depreciation on assets that are temporarily inactive until they are no longer business assets.
So he should continue to deduct depreciation and expenses incurred to keep the building standing until he rents it or sells it.
If he says it was for rent and you can not prove that it was not, then how can it not be?????

[taxea]

depreciation on assets that are temporarily inactive until they are no longer business assets.
So he should continue to deduct depreciation and expenses incurred to keep the building standing until he rents it or sells it.
If he says it was for rent and you can not prove that it was not, then how can it not be?????

I would caution my client that the IRS may not accept the deduction because the house is in foreclosure. His options are 1. to take the deductions and deal with the IRS when they ask for documentation that the place was available for rent. If they deny the deduction he could be subject to additional tax, penalties and interest. 2. Don't take the deduction unless he can prove to the IRS when they ask for documentation that the place was available for rent.
Therefore, although the option is his, I would also consider whether penalties can come my way.