Our vacation/rental property was sold on June 30, 2020 before any 2020 rentals occurred. We collected deposits for 2020 rentals in 2019 and 2020, all of which were remitted to the buyer outside of closing. The deposits received in 2019 were reported and taxed as ordinary income in our 2019 return.
Deposits and final rental payments were also collected in 2020. Some of this “income” was reported to us on a 1099-MISC and will be reported on our 2020 return.
We have two related questions:
- Where and how can we recover the 2019 tax that we paid on income which is now the responsibility of the buyer? and,
- How and where should we enter the deduction for the reported 2020 rental income?
