Monday, 19 December 2011 22:31
Tax Info: Can you write off rental loss with no tenant?
For those who have the double misfortune of owning a home with no tenant and losses for the year...can you claim rental losses if it wasn't actually rented? Short answer- YES
From a NARPM Affiliate:
"A lack of tenants won't nix a write-off of rental losses, the tax court says.
After buying a home, the owner moved away and rented it out for years. After her last tenant moved out, she was unable to rent it despite her best efforts.
An IRS examiner denied her rental losses because of the lack of rental income, but the tax court OK'd her rental losses for the two years after her last tenant left.
In the Court's view, the property was still held for income-producing purposes and she actively participated in the rental activity. (Bonds, TC Summ. Op. 2011-122)
As long as an owner is actively trying to get a tenant into the property, and can prove this by showing that they were advertising for renters or had property managers actively looking for renters, then the owner can continue to write off all expenses of the property as a rental loss.
Important note: At no time should the owner use the property as a vacation property or move into the property during the time there is no renter. Doing this will void the argument noted above and disallow any rental losses.
Richard Hart EA, CAA
President
Hart & Associates
Tax Consulting, Preparation & IRS Audit Representation
President
Hart & Associates
Tax Consulting, Preparation & IRS Audit Representation
1445 American Pacific Drive #110-352
Toll Free Fax 888-235-8263
Visit us on the Web: www.Hartassociate.com
NARPM National Affiliate"
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