My renter did not pay rent. Can I claim the expenses I incurred?

[jjohn500]

My renters did not pay rent to me at all. They stayed in my house and did not pay for an entire year. Can I claim the expenses I incurred during the time they were in my house?

[DanielV01 · Accepted solution]

If you were legitimately renting to them, yes.  This is why passive income is subject to at-risk rules.  You make an investment with the property you own expecting to get income in return.  Occasionally, some are delinquent (and perhaps local law severely limits eviction).  If this was your situation, you are justified in claiming the expenses as a rental loss.  Keep in mind, however, three points:

• Your losses may be limited.  If you are not considered a Real Estate Professional (usually someone dedicated to earning rental income), your losses are limited to at least 25,000 (and you may be even further limited, depending on your income)

• It is more likely for the IRS to audit your claim.  Have excellent records of why you didn't receive income (such as efforts to evict, for example)

• You may receive income on this in the future.  If you are going through the courts and win a judgment, this is the equivalent of rental income.  You will pay taxes on that in the future, and, since you are claiming the expenses now, won't be able to claim it then.  (In reality, however, this would strengthen your argument justifying the loss).

For additional information, please see this IRS website:  Limits on Rental Losses - IRS Tax Map - IRS.gov

[abv718]

I have a similar situation where my tenant didn't pay rent for 10 months for a total of $15,450. 

How can I handle this through Turbo Tax. Do I need to let TURBO TAX do my taxes? 

[RBB1]

Same issue with me and would love to know how it is reported on turbo tax. Or do you just put in what was received for rents and not put in any negative numbers?

[MarilynG1]

@RBB1 Yes, only report rent actually received.  Don't enter a negative amount for rent you did not receive.

Enter your rental property expenses as usual.   You will have a Rental Loss this year.

Make sure you indicated that you 'Actively Participate' in your rental activity in the Property Info section. 

If your losses are not deductible this year, they will carry forward to future years.  They will continue to carry forward until (a) you have passive income (such as a profit from the rentals) for the losses to be used against or (b) you sell the property in a "fully taxable transaction".

Click this link for more info on Rental Property Loss.

[abv718]

This doesn't at all indicate my loss of over $15,000 when I indicate income of only $3200.

It's ridiculous, but thank you for your response!

[DawnC]

The rental loss is going to be generated by entering your other rental expenses, including depreciation.   Rental property is considered a depreciable asset, as are major improvements such as new roofs, landscaping, refrigerators, water heaters, furniture, and so forth.   This is often your largest rental deduction.   @abv718

What kinds of rental property expenses can I deduct?

What is rental depreciation and how does it differ from an expense?

Rental Expenses

[Carl]

Yes. There is absolutely noting wrong with showing zero income, while having expenses such as insurance, property taxes, mortgage interest, and other legitimate expenses associated with rental property.