Here's a variation I haven't found an answer to - how do you treat days where it is rented under a lease (for a fair market rent) to a tenant who doesn't pay. For example, consider:
Tenant is under a lease for the full year.
Tenant pays rent for 6 months
In month 7, tenant pays a bit late with a bad check that takes a few days to bounce. Promises to promptly make it good and doesn't. Notice to vacate issued
Start of month 8, eviction filed; court date is at end of month 8. Tenant loses. On last day of move-out period files a pauper's appeal. Seven weeks pass until the appeal is heard (end of month 10). After losing, the tenant gets a week to move out, doesn't, and it takes the sheriffs 2 weeks to get to forcibly removing the tenant.
At this point, the tenant paid rent for 6 months. Occupied the house for another 4.5 months with the obligation to pay rent, but without actually doing so, and then let's suppose the repairs and make-ready take the balance of the year, during which time it is available for rent.
How do you report this on schedule E? 6 months (~180 days) of being rented at a fair value? or 10.5 months (~320 days) since that's how long a tenant was in there? I can't find clear guidance - it seems like if you say 180 then the IRS will wonder why it was empty for half a year, but if you say 320, they'll wonder why you brought in so little rent. I can't find a clear explanation of whether deadbeat tenant days count as rented or not. Any guidance would be appreciated. Thanks!
