Rental property vacant for full year while under rehab - do I enter taxes, insurance, etc. as expenses?

Forum|Forum|3 months ago
April 8, 2026
1 reply
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I own a home that was continuously rented from 2006 to February 2024. Upon being vacated, the home underwent massive mold remediation. This snowballed into a much larger project, and as a result, the home was vacant for all of 2025, and is still undergoing very slow renovations which include both repairs and improvements. The rental registration fee was paid to the city for 2024, 2025, and 2026 since we planned to keep it as a rental. It will not be sold, but now the possibility exists for it to be converted to personal use in 2026.

Should the property taxes, insurance premiums, repairs, and utilities be entered on the 2025 return as expenses for this property since it was being maintained as a rental for the year? Is my understanding correct in that the improvements should not be entered for 2025 since the property was not available for rent during that time?

I understand that any loss of rental income for 2025 is not deductible.

I also entered an improvement during 2024, which started depreciation on that improvement. I am now questioning whether I should have entered it for 2024 since the home remained vacant after the improvement date.

My questions stem not from a concern about my current tax liability, but rather from ensuring that I correctly enter the information to avoid any negative consequences in the future. Any guidance would be most appreciated.

Thank you.

DianeW777

Level 15

First, once the property was not available for rent, all expenses cease at that time. Any capital improvements will be added to the cost basis as a separate amount. As far as 2024 goes, if the home was available for rent at a certain point then the improvements asset was entered and used appropriately, even if the property did not have a tenant.

For 2025 maintain all capital improvements records and if there was no rental activity because it was not made available for rent, then the expenses you listed (property taxes, insurance premiums, repairs, and utilities) are not deductible on the Schedule E rental. The property taxes could be used on Schedule A if you itemize deductions.

In the rental property assets you should indicate the following:

Once you reach the asset section of your rental property you will select each asset and then indicate the following as the screens come
1. Beside each Asset select to edit/update
  1. Select The item was sold, retired, etc...
  2. Do not enter a date of sale instead select that is was converted to personal use and enter the date.
  3. Continue to Select 'Yes' for Special Handling.

Keep all the asset records so that you do have them if and when you sell the property. The depreciation recapture will be necessary when and if that happens in the future.

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mst98Author

Level 2

I appreciate your response.

Question about "As far as 2024 goes, if the home was available for rent at a certain point then the improvements asset was entered and used appropriately, even if the property did not have a tenant."

The improvement was the addition of exterior perimeter drains, a french drain, and a sump pump to deal with standing water in the crawl space (which was what caused the mold problem in the first place.) This improvement was made after the tenants vacated, but the property did not return to a rentable condition after this date. Thus my concern about entering it as an improvement during 2024.

Additionally, the intent was always to rent it, but the renovations have been painfully slow. So I don't know what date to enter as a conversion to personal use.

Thank you again.

MarilynG

Level 15

Since the improvement was made after the tenant moved out, and the property was not available for rent after that, you could Amend your 2024 return to remove the Improvement Asset. Add this amount to your Cost Basis instead. If you rent again in the future, use the new Cost Basis when setting up the rental.

Otherwise, track any additions to Cost Basis for whenever you sell the property.

@mst98

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