Can I claim expenses related to sale (tolls, utilities, etc.) of a rental property that was not rented out during the year of sale?

[sbavc]

Hi, I sold a rental property in March of 2020 for a profit in NJ (I live in NYC). The property has been vacant since 2019 and as such I did not include it in rentals for 2020. Can I claim expenses related to the rental properties (utilities, real estate taxes, tolls, etc...)? If yes, where can I claim these expenses?

[Carl]

If you did not rent or "attempt" to rent out the property in 2020, then legally speaking you need to convert the property to personal use with a conversion date of 1/1/2020. Any and all expenses incurred after the date of conversion are just flat out not deductible as rental expenses. The only deductions you can claim for the property on your 2020 taxes would be mortgage interest and property taxes actually paid in 2020, as a SCH A itemized deduction.

Then, having sold the property in 2020 you would report this sale in the "Sale of Business Property" section, and a fair number of expenses related to the sale would be deductible there.

Otherwise, if you did at least "attempt" to rent the property in 2020, then it can stay classified as a rental property and rental expenses incurred in 2020 can be claimed as such, despite the fact there was no rental income. Also, you'll report the sale in the SCH E section.