Rental expense versus selling expense

Forum|Forum|3 years ago
February 11, 2023
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I sold a rental last year….renters moved out june 30, I fixed it up for a week, listed and closed august 30….I did a couple of repairs(no improvements) and had some landscaping cleanup done…..how do I treat those along with interest, insurance and tax for that 60 day period where nobody lived there and I didn’t have it advertised for sale? All expenses for the rental or should I pro rate it and those 60 days of the above items would be selling expenses instead?

MAK70

You can deduct the expenses of a vacant rental property. The two issues in your question are: Did you hold it as a rental property? and Is "advertised for sale" the same as held for sale? If they do not qualify as expenses, you could not use them as selling expenses.

The IRS says:

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. (Vacant rental property.)

as opposed to

Vacant while listed for sale.

If you sell property you held for rental purposes, you can deduct the ordinary and necessary expenses for managing, conserving, or maintaining the property until it is sold. If the property isn’t held out and available for rent while listed for sale, the expenses aren’t deductible rental expenses. (Vacant while listed for sale.)