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Can I use tax advantages even if I haven't yet rented my property?

October 9, 2014

From:  Diana
Date:  01 Mar 2013

House went available for rent in June of 2012. Can't find a tenant. Can I still use the tax advantages to recoup some of what I spent in regards to the improvements and repairs of getting it ready for renting?

Your advice is appreciated. I can't find answers.



Date:  04 Mar 2013

Hello Diana,

Rental expenses start being deductible when the house is vacant and advertised as available for rent.

Get a copy of Publicationi 527 at the IRS website or you can call the IRS and they'll mail it to you.

The improvements might have to be capitalized and repairs before rental may be start-up costs subject to special rules.

Rental losses are also subject to limitations under the passive activity loss rules.

I suggest that you get professional help preparing your income tax returns at least for the first year for which you claim rental expenses and depreciation.

Best wishes,
Mike Gray

We have more answers to frequently asked real estate tax questions! We also offer up-to-date information about new tax real estate tax developments in Michael Gray, CPA's Real Estate Tax Letter.

IRS Circular 230 Disclosure: As required by U.S. Treasury Regulations, you are hereby advised that any written tax advice contained on this website was not written or intended to be used (and cannot be used) by any taxpayer for the purpose of avoiding penalties that may be imposed under the U.S. Internal Revenue Code.

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