rental property not rented

[jimenright]

How long can an owner continue to take expenses on a property available for rent but not rented? My reading of the pubs shows no restriction on the amount of time

[Koss]

Available for Rent

In a down market, maybe there is no restriction. I've seen office spaces sit vacant for a year or more.

If the return is audited, the taxpayer should be able to show that the property was available fo rent, and that some effort was made to offer it for rent.

That doesn't mean they have to advertise a single-family home in the newspaper every weekend for an entire year. What is or is not reasonable efforts to get it rented will vary wildly with the facts and circumstances.

For commercial office space, in some cases, it might be sufficient to show that a billboard was put up, and that the space was listed for rent with commercial real estate broker.

BMK

[S T]

Question
Does it depend on whether or not the property is Residentail Rental vs Commercial Rental?

I could see a potential issue on Residential - maybe -- if it was a converted Personal Reidence to Rental

OP does not designate which type of property

Sandy

[ttbtaxes]

What efforts, and dollars spent, can the taxpayer should for trying to rent the property?

[taxea]

What efforts? Word of mouth, a sign on the property, periodic advertising in newspapers, craigs list, online rental lists are a few I can think of. All of these show an ongoing attempt to rent and expenses for this and upkeep are deductible.

[snowshine]

During numerous audits covering this situation with residential rental units the questions always seem to come down to:

1.Did you repeatedly advertise in a newspaper or hire a rental agent? Signs, internet, and word of mouth etc are considered hearsay. Some cancelled checks to the newspaper or weekly advertiser come in handy.

2. Did you remodel the place and try to claim expenses as repairs? This is almost an automatic disallowence of claimed expenses as it proves the unit was not available for rent during this time.

I have never experienced any problems with unoccupied commercial rental units.

[Gary2]

During numerous audits covering this situation with residential rental units the questions always seem to come down to:
...
2. Did you remodel the place and try to claim expenses as repairs? This is almost an automatic disallowence of claimed expenses as it proves the unit was not available for rent during this time.

You're saying they would disallow expenses if a landlord remodeled between tenants? That doesn't sound right. I could understand having to capitalize the remodeling expenses, but surely insurance, utilities, interest, etc. during that period should be allowed, even with no Sch. E income, as long as the time frame for the remodeling makes sense. Do the auditors have a particular regulation or audit procedure that relates to being temporarily off the market?

[taxea]

I agree with Gary. In this economy I would think the IRS would be more understanding and you could always take it to appeal or the advocacy if they deny something you feel should have been allowed.

[S T]

Part of what Snowshine maybe was referring to was a Personal Residence converted to Rental and that period of time before the Property actually becomes available for Rent.
I have had that question,

Or when the Real Estate Market was such, that Clients were purchasing Rental Property that was somewhat distressed - and they decided to remodel - and it took 9 months to a year" before they could actually Rent the Property. Then probably no deduction until such time as the Property was really held out for Rental

I have not had the "pleasure" of an IRS question, when the property has been a rental for several years and then needed a "reasonable Rehab/Remodel" short period of time.

We had a thread on this sometime last year - I just can't find it right now

Sandy

[New York Enrolled Agent]

How long can an owner continue to take expenses on a property available for rent but not rented? My reading of the pubs shows no restriction on the amount of time

Facts and circumstances will control. Was it a personal residence turned into a rental? There is no definitive time factor. You might want to look at some Court cases that touch on this. You can start with TC Memo 1981-175 and TC Memo 2002-143. They will also offer you other cites.