I have a tax question. I owned a rental property which was destroyed in a fire (location HI). The rebuild period is 6-8 years. We are unsure what we will do with the property once it is rebuild, hold for personal use, sell or rent. What are options for my schedule E, here is what I think:Convert to personal property or second home (it’s just land at the moment)Not sure the tax implications of thisContinue the rental on my schedule E and deduct HOA and property tax annual with no income. As rebuild expense occur add them to the deprecation once complete

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Question

Rental Property Destroyed (wildfires) & Rebuild is 5 years + what to do with Schedule E

Forum|Forum|1 year ago
January 23, 2025
1 reply
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I have a tax question. I owned a rental property which was destroyed in a fire (location HI). The rebuild period is 6-8 years. We are unsure what we will do with the property once it is rebuild, hold for personal use, sell or rent. What are options for my schedule E, here is what I think:

Convert to personal property or second home (it’s just land at the moment)
1. Not sure the tax implications of this
Continue the rental on my schedule E and deduct HOA and property tax annual with no income. As rebuild expense occur add them to the deprecation once complete

RobertB4444

It is already converted to a second home by the fire. A rental property has to be available to rent during any period where you are deducting expenses. Unless you can figure out a way to list the empty land as available to rent it can't be rental property.

For now, you can deduct any property taxes or mortgage interest as part of your personal itemized deductions (if you qualify) and add up any costs that are incurred to add to the basis of the property once it is completed and available to rent again.

@MapsTaxOy

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