Can I file Schedule 1 and Schedule E to claim my expenses and show a loss for the property?
Assuming you owned the property on or before Dec 31, 2020 (As opposed to the estate owning it) that shouldn't be a problem. Your cost basis in the property will be the FMV on the date of the original owner's passing, and not the date you acquired ownership. It may (or may not) be necessary to obtain an appraisal on the property in order to establish that FMV. Generally, if an appraisal was done within the last two years prior to your acquisition, that appraisal will suffice. Now there are many ways to establish FMV. But in my opinion (and we call know what opinions are like!) having a current appraisal is the best.
I will show a profit or gain for 2021.
While not impossible, I doubt it. Generally, residential rental real estate always operates at a loss on paper, at tax filing time. When you add up the allowed deductions of Mortgage Interest, property taxes, insurance, and the depreciation you are required to take by law, those four items alone almost always exceed the total rental income received for the tax year. Add to that the other allowed rental expenses (repairs, maint, advertising, etc) and you're practically guaranteed to operate at a loss.
However, if there's no mortgage on the property then chances are you will show a bit of a taxable gain. I myself have that situation with one of my properties that I paid off a number of years ago.
