Landlord and Eviction Moratorium/Covid

[TrishF2021]

Can I, as a landlord, deduct any loss of rent and/or legal fees resulting from the eviction moratorium/covid and a renter not paying rent?

[Rick19744 · Accepted solution]

The Eviction Moratorium provided help for one set of individuals but created a problem for another set of individuals: the landlords.

Without going into details of the Eviction Moratorium, you are able to do the following:

• take your ordinary and necessary expense deductions
• claim legal fees for any legal work performed in attempting to collect the rent or filing eviction notices.  But as you know, filing the eviction notice is one thing, but unfortunately, as you know, it is temporarily meaningless.
• you cannot take a deduction for unpaid rent.  This is due to the fact that landlords are typically cash basis taxpayers and since they have not picked up the income, there is no corresponding tax deduction for a loss.
• the best you can do is work with your tenants; get partial payments, etc.
• best advice is to also work with your legal counsel.

[TrishF2021]

Thank you so much for the information.  We did not evict but we do have legal fees in trying to negotiate and collect from the renter.  Our rental is not for profit, did not make enough to cover interest/taxes so we do not have to claim the income. If not claiming the income I cannot claim any standard expenses or the legal fees correct?

[TomD8]

<<"Our rental is not for profit, did not make enough to cover interest/taxes so we do not have to claim the income.">>

Not true.  Not-for-profit income must be declared.  

Per the IRS:

Report your not-for-profit rental income on Schedule 1 (Form 1040 or 1040-SR), line 8, or Form 1040-NR, line 21.

If you don’t rent your property to make a profit, you can’t deduct rental expenses in excess of the amount of your rental income. You can’t deduct a loss or carry forward to the next year any rental expenses that are more than your rental income for the year.

See "Not Rented For Profit" in this IRS reference:

https://www.irs.gov/publications/p527#en_US_2019_publink1000219164

Not that not-for-profit rental income is not reported on Schedule E.

[TrishF2021]

Thank you so much for the information and the link.  I got the "not required to report the income" from a previous answer from 2019 from a "new member" so I will go read this IRS link and claim the income and expenses as stated.  

[Critter-3]

Even for a not for profit you must declare the income however the expenses are limited to your income.