Rental Property

[MBTS]

I posted this on another forum however I wanted to get your feedback also

I have a client who has one rental home. Early last year the renters moved out leaving behind a lot of needed repairs. The little income and expenses were recorded in 2014. I spoke with the client this week regarding someone I knew that was interested in renting the home. She said that she was still repairing on the home so it's not for rent. She also said that she is only able to repair on it in her spare time. So that leads me to think it wont be rented this year.

Client has stated in the past that she wished she never started renting.

If the home is NOT available for rent, can deductions be taken?

Thanks

[ATSMAN]

I posted this on another forum however I wanted to get your feedback also

I have a client who has one rental home. Early last year the renters moved out leaving behind a lot of needed repairs. The little income and expenses were recorded in 2014. I spoke with the client this week regarding someone I knew that was interested in renting the home. She said that she was still repairing on the home so it's not for rent. She also said that she is only able to repair on it in her spare time. So that leads me to think it wont be rented this year.

Client has stated in the past that she wished she never started renting.

If the home is NOT available for rent, can deductions be taken?

Thanks

I had to deal with a similar situation last year. I believe it depends on what the intention of the landlord is and what is eventually done. So if the landlord intends to rent it after repairs are completed and does so i am comfortable putting the repairs on Sch e and also taking depreciation because the property in my opinion is available for rent though temporarily out of service.

However if the landlord decides that she is not sure if she will rent out after the repairs are done then it may be appropriate to take it off and the repair expenses capitalized or added to basis.

In my situation the property was back on rent after repairs and most of the repairs were done by the landlord and his son personally.

[Gretel]

It seems rather a long time that this rental is not available for rent. If repairs are not done within a reasonable amount of time, I would not allow any expenses for the time the rental is not available for rent.

[Roberts]

I'd say if it's already been 12 months and they aren't actively trying to find a renter - they aren't looking to make a profit. But that's just my opinion.

Questions I'd ask: Does the property have an occupancy permit? Locally we are required to get a permit every time tenants change and if it doesn't have an occupancy permit - hard to claim it's available as a rental property. For example a client bought a house and did significant work on it and THEN got the permit. I claimed the work was done as a rehabber and not as a landlord since he hadn't rented it or shown it was rental property.

How long do they estimate this will take? Would a profit motivated landlord really take that long?

JMO but those are INVESTMENT expense being incurred - not rental expenses.

[TAXNJ]

Pub 527

Is your client "actively" trying to rent the property? Need to find out. Your client is the one with the answers as to if it is going to be rental property and then you would decide on the tax issues depending on client's answers. No matter how many forums you go to seek answers you may be wasting time when the answer can be in front of you.

Other reply posts providing sound info.

Also refer to pub 527

[Kram BergGold]

My Take

If I am reading this correctly it has been almost a year and a half with no tenant. I would say, if it is not rented before the 2015 return is prepared that it was not available for rent in 2015. It would take special circumstances for me to believe she was trying to get it to the rerntal market.

[Gretel]

Pub 527

Vacant rental property. If you hold property
for rental purposes, you may be able to deduct
your ordinary and necessary expenses (including
depreciation) for managing, conserving, or
maintaining the property while the property is
vacant. However, you cannot deduct any loss of
rental income for the period the property is vacant