JamesG1
Employee Tax Expert

Investors & landlords

Whether you can deduct the unpaid rent as a loss depends on your method of accounting for your 1040 Schedule E rental real estate activity:

  • If you are an accrual basis taxpayer, then you would record this on the Other expense line and just title it Bad debt.
  • If you are a cash basis taxpayer, then there is no bad debt because you have not previously recorded the income. income.

See also here.

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