If you continued to advertise and have the house available for
rent after the tenants moved out and while the property was for sale, then the
expenses would be considered rental expenses and can be deducted on Schedule E.
If the property was not made available for rent during that
time, then the repair expenses are considered personal expenses and would not
be deducted. Costs of improvements (such
as the carpet) can be added to the basis of the property.
