Rental expenses with no income

[TaxTime829]

Client has a rental home that was rented and generated income in the past. For the last 4 years it has not been rented but they have been repairing the property... roof, furnace, windows, etc. but have had no income.

Not sure what the rules are in this case... all money is fully at risk and they manage and maintain the property themselves.

Can they continue to show a loss on the property in the 4th year?

Business loss after 3 years looks like a hobby... but this is a rental that needed repairs.

[ttbtaxes]

The hobby loss rules shouldn't apply to rental property. If the property was not in a state where it could be rented because it was being repaired then no losses should have been reported. If it was in a state where it could be rented then the elephant in the room was why was it not rented. If they can't show sufficient efforts to rent the place, then the prior losses may get tossed.

[Roland Slugg]

For the last 4 years it has not been rented but they have been repairing the property... roof, furnace, windows, etc. but have had no income.

Replacing a roof is typically a one-week job. A new furnace takes two or three days ... longer if there is a lot of retrofit duct work. New windows? A good contractor could replace every window in an entire medium-size in one month ... maybe two if there was a lot of repair framing to do.

So why four years? Sounds to me like the owner simply decided to cease renting the property four years ago, and if he did, there should not have been anything reported for it ... i.e. deducted ... on Schedule E since then.

[Gary2]

A good contractor could replace every window in an entire medium-size in one month

If they're not stock sizes (and often aren't), it can take quite a bit more than a month to get them from the manufacturer. Ask me how I know. (err, no, don't ask. At least our contractor had space to store the new windows over the winter.)

[Roberts]

Four years without rent - does he have a rental property or does he have a rehab project?

[JON]

Not a rental

Has to be available for rent and trying to rent. Out of service for years where there was not active trying to rent.