deducting for loss of income and damages due to tenant at home rental

[deandery]

A Connecticut court in 2025 determined our loss of income and damages for a home we rented to a tenant in 2019-20. We received no money and could not evict the tenant due to COVID. The home was not rented while repairs in 2022-24 were made which totalled $90,000 and insurance only covered $2000. Last year we made about $22,000. Can we deduct the $90,000 loss from that and is there a way to carry forward the uncovered loss to next year?

Thanks for your reply.

[M-MTax · Accepted solution]

If the expenses were truly repairs and the home was available for rent during that period, then the expense can be deducted.

If the home were not available for rent and/or the repairs were more on the order of improvements, then the cost should be added to your basis and depreciation deductions should be taken.

[deandery]

Thank you very much for the reply!

The repairs were finished in 2022 totalling $90,000 but the court only decided in 2024 that the total was indeed a loss.

I have follow up questions:

1- last year 2025 was our first income from the property- $22,000. Can we deduct the $90,00 from our income?

2- how do we report that now since I filed our 2025 taxes aleady?

3- Can I carry forward the remaining loss (90,000-22,000) to next year and years after?

Again, thanks very much for your help!

Dean

[M-MTax]

The loss, whether you depreciate the expense or deduct it as a repair, will be a passive loss that will carry forward to the following tax year. You can only deduct passive losses from passive income, generally, so you likely won't be able to offset other types of income with this loss (e.g., W-2 income, interest, et al).

[M-MTax]

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@deandery wrote:

........how do we report that now since I filed our 2025 taxes already?

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If the expenses were paid in 2025, then you should likely file an amended 2025 return.

[AmeliesUncle]

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@deandery wrote:

A Connecticut court in 2025 determined our loss of income and damages 

 repairs in 2022-24 were made which totalled $90,000 and insurance only covered $2000.

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Just so things are clear, the actual COST of repairs was $90,000, right?  The "loss of income" does not factor into anything, other than the fact you didn't need to report income for those years.