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Rental property rented for 5 months, rest of the year was for sale (vacant). Do I split the costs (interest, taxes) between rental property SCHEDULE E and DEDUCTIONS?

Forum|Forum|7 years ago
June 6, 2019
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I have a Rental property and was rented for 5 months (Jan-May), the rest of the year was for vacant and for sale. Do I need to split the costs (e.g. interest, taxes) between rental property SCHEDULE E and DEDUCTIONS?

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Best answer by ChelsiE2

If you did not use this home as a second home or vacation rental and it did in fact just sit empty and available for sale, then go ahead and deduct all expenses related to the property on Schedule E.

Note: If you used the home at all as a second home or vacation property, then you would need to split between Schedule E and Itemized Deductions.

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Hiker31

What about depreciation? Mine was my primary home for 2.5/5 yrs, rented 3 months in 2016, vacant for 5+ months, sold in Sept 2016. Are all utilities, insurance, taxes reported on Sch E for all 9 months, and is depreciation for 9 months or 3 months?

C

ChelsiE2Answer

Employee

If you did not use this home as a second home or vacation rental and it did in fact just sit empty and available for sale, then go ahead and deduct all expenses related to the property on Schedule E.

Note: If you used the home at all as a second home or vacation property, then you would need to split between Schedule E and Itemized Deductions.

E

Ed--CAuthor

Thanks ChelsiE. It did in fact just sit empty and still is on the market. I am asking because I had a big loss on Schedule E because it was sitting empty for 7 months. However, since the jointly yearly wage is 150k, I can't deduct the loss. If I split the expenses between Schedule E (5 months of the expenses) and Itemized Deduction (7 months of expenses), I have a smaller loss in Schedule E but I can deduct the rest on Itemized Deductions. I wonder if in this case the splitting is applicable. Thanks.