Hi, I had a rental property that did not produce any income during 2020. Can I enter property taxes and mortgage interest I paid for that property?

[abdulrkamal]

Previously I have deducted these from the income it produced.

[DavidD66]

It depends on why it didn't generate any income in 2020.  If you took it out of service (were not trying to rent it), unless it was for repairs, you cannot deduct any expenses as rental expenses.  The tax and interest can be added to your basis.  If you converted it to personal use for 2020, then you can deduct the mortgage interest and taxes as itemized deductions.   If the property was available for rent, but you could not find a tenant, then your interest, tax, and other expenses like utilities and lawn care are deductible rental expenses.   

[Critter-3]

If the property was available for rent and you tried to rent it then you will continue reporting all the expenses on the Sch E.  

[abdulrkamal]

Thanks for the response. Property was listed for sale and sold it in May 2020 for a loss. Was able to enter the loss on selling the rental property. But not able to enter the mortgage interest or property tax. When I answer the question that it did not generate any income for 2020, it does not accept these expenses anywhere. Does that mean, these two expenses can be deducted only from the income it generated. In my case, it did not generate any income and hence I cannot deduct these expenses?

[DianeW777]

No. The expenses are allowed in the rental activity under the expenses that apply for the final year whether or not there was rental income. Change your answer to 'Yes', that it did generate income in 2020 so that the final expenses can be entered. 

[abdulrkamal]

Thanks. That helped. Entered income as 0 and entered all the expenses. Now it is showing a minus $ amount. I’m towards the end. When I clicked ‘Why is my total income ???’, it shows the details of my income minus the loss I made selling the house correctly. But, it shows other schedule E income a bigger amount that it deducted. Not sure where this coming from. I expected only the rental home expenses I entered. I cannot see the break-up anywhere. Any idea? What else comes from Schedule E? 

[ColeenD3]

It could be depreciation. Keep in mind the following while deducting amounts while it was for sale.

As Critter3 stated above, it must be held out for rent.

Vacant while listed for sale. If you sell property you held for rental purposes, you can deduct the ordinary and necessary expenses for managing, conserving, or maintaining the property until it is sold. If the property is not held out and available for rent while listed for sale, the expenses are not deductible rental expenses.

[abdulrkamal]

Thanks again for all the valuable responses. This may be my last question on this. I did not deduct and don’t have any maintenance related expenses. Question is only on mortgage interest and property tax paid. Are these two deductible if the property was not available to rent and listed for sale? Also, Turbo Tax is deducting the excess expenses carried over from last year. Is that allowed to deduct this year if property was not available to rent?

[ColeenD3]

No, all expenses are equal in this regard.