Yes, your expenses are deductible regardless of if you report your activity as a rental or a business. To qualify as a business, you'll need to meet the criteria of a "Real estate professional".
The only advantage of this is that the losses aren't limited to $25,000 or phased out over the income limitation. The expenses deducted don't change.
To Qualify As A Real Estimate Professional (see attachment from the learn more button in TurboTax at the start of the rental section you're are asked these questions):
- Must spend more than 750 hours a yearly involved in real estate and keep good records of this time (this can be commonly reviewed by the IRS).
- Spend more than 50% of your work-related time involved in real estate.
Note that you can deduct all of you expenses on schedule E, reducing your rental income. As rental income is passive income, you usually cannot take a loss against all other types of income. However, there's a rental property exception that as long as you actively participate in managing the rental, you can take up to a $25,000 loss against all other income. However, this deduction is phased out over total personal income of $100,000 - $150,000.
Based on this added info, let me know where you're at and your follow up questions for more assistance.
