Rental was taken out of service, what can I deduct while finishing house and waiting for sale, and QBI question.

[Landlady J]

I am a single member LLC (a non-entity).  I bought a house in 2014 to flip because I watched too much Flip or Flop on HGTV.  I never lived in the house.  In Jan 2019 I put the house in service and rented out what was partially finished.  I took it out of service the end of March 2023.  I finally finished the house and sold it in March 2024.

     1. I took the house out of QBI for an unknown reason (mistake?)  in 2022.  It was rented but didn't make a profit.  Should I file an amended return for 2022 and put it back in QBI?  I would have to pay $192 for 2022 but that's okay as I'm not trying to evade taxes.

     2.  In 2023, rented the same portion of the property a few months then took out of service.  It lost money again.  I spent the rest of the year finishing it to sell.  Does the property qualify as a QBI?  I am thinking it's not.

     3.  After the house was out of service but being finished for the remaining 9 months of 2023, what type of deduction do the following things qualify for, Cost Basis, Selling Expense, or no deduction at all anywhere?  I find conflicting info online.

                a.  Taxes (9 months)

                b.  Interest (9 months)

                c.  Plowing (only once)

                d.  Security system monitoring (9 months)

                e.  Vehicle expense (9 months)

Thank you.

[MarilynG1]

If you had no positive rental income in 2022, no point in going back to amend to put the rental in QBI.  You need positive income to benefit from QBI.

Capital improvements you did to the property after it was no longer a rental, are added to the Cost Basis.  Sales Expenses are also added.  Your final Cost Basis is subtracted from Sales Proceeds to calculate gain/loss.

Remember that all depreciation (taken or not) that the property was eligible for will be subtracted from the  Cost Basis to get an Adjusted Basis, before adding improvements/sales costs.

Since you sold the property in the same year that you stopped renting, you could still report your expenses as Rental Expenses on Schedule E.

Here's more info on Expenses Preparing Rental for Sale.

[Landlady J]

Thank you for your quick reply.  The property was taken out of service in 2023 and sold in 2024.  I am all set now.  Thank you.