topic Sale, for a loss, of a 2nd home converted to rental property 1/1/2016 but not rented before sale in Investors & landlords

Sale, for a loss, of a 2nd home converted to rental property 1/1/2016 but not rented before sale

chris34 — Thu, 06 Jun 2019 09:53:07 GMT

1. If I didn't live in the house in calendar year 2016, can I consider the home a rental property if I considered renting it before selling it, but ultimately sold it without renting it?
2. If so, can I report the loss as negative income, and if so, how much?

If you never had a tenant, the IRS won't consider the hou...

TomD8 — Thu, 06 Jun 2019 09:53:10 GMT

If you never had a tenant, the IRS won't consider the house rental property unless you can prove you made a bona fide attempt to rent it, e.g. by advertising it as available to rent, listing it as a rental with a real estate agency, etc.

Interesting. I don't see anything on the IRS website that...

chris34 — Thu, 06 Jun 2019 09:53:11 GMT

Interesting. I don't see anything on the IRS website that says that a property: 1. has to have been rented to declare it a rental property, or 2. has to have been listed with a real estate agency (i.e. "bona fide attempt") as a rental. In my case, I had a potential tenant lined up (family member), but decided to sell when I got the offer. IRS website seems to say that the conversion takes place whenever "the property is ready for its specific use as a business property".

The IRS criteria is that the property becomes rental prop...

TomD8 — Thu, 06 Jun 2019 09:53:13 GMT

The IRS criteria is that the property becomes rental property "from the time you make it available to rent."  See this:
"You can deduct your ordinary and necessary expenses for managing, conserving, or maintaining rental property from the time you make it available for rent."  <a rel="nofollow" target="_blank" href="https://www.irs.gov/publications/p527/ch01.html#en_US_2016_publink1000218979">https://www.irs.gov/publications/p527/ch01.html#en_US_2016_publink1000218979</a>

This reference shows how one Tax Court interpreted the rules in 2015:  <a rel="nofollow" target="_blank" href="https://www.forbes.com/sites/anthonynitti/2015/05/20/tax-court-in-order-to-convert-a-home-to-a-rental-you-should-probably-rent-it/#18d71d6148ec">https://www.forbes.com/sites/anthonynitti/2015/05/20/tax-court-in-order-to-convert-a-home-to-a-rental-you-should-probably-rent-it/#18d71d6148ec</a>

If you treat the home as rental property on your tax return, the referenced court case may give some insight into how the IRS might challenge you if you are audited.

That hurts, but thanks for all the info.

chris34 — Thu, 06 Jun 2019 09:53:13 GMT

That hurts, but thanks for all the info.