Question

Rental Property Question

Forum|Forum|5 years ago
February 26, 2021
1 reply
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Have a 2nd home rental in which a tenant paid rent up thru November of 2019. In November the tenant quit paying rent and left. The tenant wasn't evicted nor did they requested a release from the lease contract. The tenant did not finish removing all of their personal property from the property until April 2020. In the mean time there was considerable repair and clean up during the time period 1/1/20 until 4/30/2020. From the period May thru June 2020 I began advertising, showing and reviewing references for new tenants. In late June 2020 when I was about to sign a new contract with new tenants, I found out from a neighbor near the rental property that the previous tenant had been using drugs inside the home. Testing verified contamination and I immediately took the home off the market at the end of June before signing any new contract. My questions are: 1) Can I claim repair and cleaning expenses through for the period 1/1/20 thru 6/30/20? and 2) Can I claim a loss or a decrease in the basis of the property in 2021 or 2022 Tax Year for any contamination residue remediation costs that I may not recover once an insurance claim is resolved?

J

JeffreyR77

Yes you can claim the repair and cleaning expenses you incurred from the time the tenant vacated until the property is available for rent again.

The repair and cleaning expenses have to be limited to putting the property back in the same or similar condition it was, it cannot involve measurable improvement to the property.

Your second question really cannot be answered as it requires speculation on multiple variables at the present time.