What is "retired from use date" for a rental property? My property was a rental from Jan-Oct 2022 but my tenant was not paying rent. I listed the property for sale after

[hazim]

What is "retired from use date" for a rental property? My property was a rental from Jan-Oct 2022 but my tenant was not paying rent. My tenant damaged the property so I had to remodeled the property from Oct-Nov 2022 and listed it for sale. The property was sold in beginning of 2023. May I expense property tax, insurance, depreciation, utilities and mortgage interest for full year of 2022?  Also may I expense remodeling cost?

[Carl]

What is "retired from use date" for a rental property?

That would be the date you converted the property from a rental, to personal use.

My property was a rental from Jan-Oct 2022 but my tenant was not paying rent.

That's irrelevant, and has nothing to do what-so-ever with the date you converted it to personal use. In fact, based on my understanding of your post, I see no reason to convert the property to personal use.

My tenant damaged the property so I had to remodeled the property from Oct-Nov 2022 and listed it for sale.

Okay.

The property was sold in beginning of 2023.

Okay.

May I expense property tax, insurance, depreciation, utilities and mortgage interest for full year of 2022?

If you left the property classified as a rental for the entire year, then yes.

Also may I expense remodeling cost?

No. What you are calling remodeling costs, I'm assuming are property improvements (as opposed to repairs or maintenance).  Property improvements are added to your cost basis of the property, which will reduce your taxable gain realized from the sale.

[hazim]

Thanks Carol. Could you answer the follow up questions listed below: 

I didn’t convert the property for a personal use, it was vacant while it was listed for sale. The property was a rental until Oct 2022. Tenants were evicted in Oct 2022 and the property was listed for sale in mid Nov. May I expense property tax, insurance, depreciation, utilities and mortgage interest for full year of 2022?

The remodeling that was done on the property because of my tenant damaged the property so would this considered an expense for 2022? If it not an expense, may I depreciate the remodeling cost for the time period between remodeling was completed until the rest of the 2022?

[Carl]

May I expense property tax, insurance, depreciation, utilities and mortgage interest for full year of 2022?

Again, just as I stated in my earlier post, if the property remained classified as a rental for the entire 2022 tax year, then yes.

The remodeling that was done on the property because of my tenant damaged the property

Why you remodeled doesn't matter.

so would this considered an expense for 2022?

Most likely no, based on my assumption that what you are calling a remodel, is actually a property improvement by IRS definitions.

If it not an expense, may I depreciate the remodeling cost for the time period between remodeling was completed until the rest of the 2022?

That's what I said above, though not directly. Assuming that what you call a remodel is "in fact" a property improvement, it adds to your cost basis in the property. So that cost is capitalized and depreciated with depreciation starting on the first day the improvement asset was placed in service. The remodel would be entered as an asset in the assets/depreciation section of the program with an "in service" date being the date the work was completed, or the first day it was "available for rent", whichever is last.

[hazim]

Does the date "available for rent" mean the house was listed for rent? In my case the house was listed for sale so should I used the date of remodeling completion as the date to start asset depreciation?

[Carl]

That's what I would do. The depreciation taken between the in service date and the closing date on the sale is going to be so minimal that it really won't matter that much to your bottom line. Also helps keep the reporting of the sale simpler and easier too.

[hazim]

Thank you so much!

I didn't receive rent from my tenant from Jan-Oct 2022. Would I receive any tax advantage from this situation? 

[Carl]

I didn't receive rent from my tenant from Jan-Oct 2022. Would I receive any tax advantage from this situation?

Other than the fact that you don't report as income that which you were never paid and therefore don't pay taxes on it, there is no "deduction" or other claim for money you were never paid.

However, if you incurred any legal costs associated with the eviction, you can claim them as a rental expense in the "legal and professional fees" category in the rental expenses section.