No, if it was held out for rental, it is a rental property. You can't deduct rental expenses on Schedule A. If it was merely vacant and not held out for rental, there is no deduction. If there was personal use, it is a vacation home and there are different ways to claim expenses depending on days of actual personal use.
Vacant rental property. If
you hold property for rental purposes, you may be able to deduct your ordinary
and necessary expenses (including depreciation) for managing, conserving, or
maintaining the property while the property is vacant. However, you cannot
deduct any loss of rental income for the period the property is vacant.
Topic 415 -
Renting Residential and Vacation Property
If you receive
rental income for the use of a dwelling unit, such as a house or an apartment,
you may deduct certain expenses. These expenses, which may include mortgage
interest, real estate taxes, casualty losses, maintenance, utilities,
insurance, and depreciation, will reduce the amount of rental income that's
subject to tax. You'll generally report such income and expenses on Form
1040 (PDF), U.S. Individual Income
Tax Return, and on Form 1040, Schedule E (PDF), Supplemental Income and Loss. If you're renting to make a profit and don't use the
dwelling unit as a residence, then your deductible rental expenses may be more
than your gross rental income. Your rental losses, however, generally will be
limited by the "at-risk" rules and/or the passive activity loss
rules. For information on these limits, refer to Publication 925, Passive Activities and
At-Risk Rules.
If you rent a
dwelling unit to others that you also use as a residence, limitations may apply
to the rental expenses you can deduct. You're considered to use a dwelling unit
as a residence if you use it for personal purposes during the tax year for more
than the greater of:
- 14 days, or
- 10% of the
total days you rent it to others at a fair rental price.
It's possible that
you'll use more than one dwelling unit as a residence during the year. For
example, if you live in your main home for 11 months, your home is a dwelling
unit used as a residence. If you live in your vacation home for the other 30
days of the year, your vacation home is also a dwelling unit used as a
residence unless you rent your vacation home to others at a fair rental value
for 300 or more days during the year.
A day of personal
use of a dwelling unit is any day that it's used by:
- You or any
other person who has an interest in it, unless you rent your interest to
another owner as his or her main home and the other owner pays a fair
rental price under a shared equity financing agreement
- A member of
your family or of a family of any other person who has an interest in it,
unless the family member uses it as his or her main home and pays a fair
rental price
- Anyone under
an agreement that lets you use some other dwelling unit
- Anyone at
less than fair rental price
If you use the
dwelling unit for both rental and personal purposes, you generally must divide
your total expenses between the rental use and the personal use based on the
number of days used for each purpose. You won't be able to deduct your rental
expense in excess of the gross rental income limitation (your gross rental
income less the rental portion of mortgage interest, real estate taxes, and
casualty losses, and rental expenses like realtors' fees and advertising
costs). However, you may be able to carry forward some of these rental expenses
to the next year, subject to the gross rental income limitation for that year.
If you itemize your deductions on Form 1040, Schedule A (PDF), Itemized Deductions, you may still be able to deduct your personal portion of
mortgage interest, property taxes, and casualty losses on that schedule.
There's a special
rule if you use a dwelling unit as a residence and rent it for fewer than 15
days. In this case, don't report any of the rental income and don't deduct any
expenses as rental expenses.
