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First time renting

Joans1738 — Mon, 09 Mar 2026 11:07:30 GMT

If a new home owner bought a two family house and tried to rent one of the units and live in the other unit but was unable to, They’re father live in the rental unit but were receiving unemployment and couldn’t pay the rent. Can they apply for rental loss using schedule E? If so, What would they put on Rents received, repairs, supplies, utilities and depreciation expenses sections if they never rented one of the units before as first time home owner.

Re: First time renting

DianeW777 — Mon, 11 Apr 2022 19:34:18 GMT

If you allowed a family member to live in the duplex you had intended to put up for rent, and they were unable to pay fair rental value you cannot deduct any losses. See below.

Not Rented for Profit

If you don’t rent your property to make a profit, you can’t deduct rental expenses in excess of the amount of your rental income. You can’t deduct a loss or carry forward to the next year any rental expenses that are more than your rental income for the year.

Where to report.

Report your not-for-profit rental income on Schedule 1 (Form 1040), line 8. If you itemize your deductions, include your mortgage interest and mortgage insurance premiums (if you use the property as your main home or second home), real estate taxes, and casualty losses from your not-for-profit rental activity when figuring the amount you can deduct on Schedule A.

Re: First time renting

Joans1738 — Mon, 11 Apr 2022 19:37:27 GMT

My father only stayed there for a short time (2 month) can I use the rest of the year (10 month) as rental loss using schedule E? Would I get audited or penalized for using schedule E?

Re: First time renting

DianeW777 — Mon, 11 Apr 2022 19:57:51 GMT

It's a decision you must make based on all the facts and information you receive. It seems like you should have been able to obtain a tenant within 10 months. You have to be prepared for documentation about the steps you have taken to try to rent the property and whether the amount of rent you wanted to charge was reasonable and in line with the fair rental value of that specific geographical area.

The following publication will be helpful and informational about rental property.

IRS Publication 527