Former tenant filed Chapter 7, how do I claim the loss?

[GMLWONG]

A former tenant finally filed Chapter 7 in 2023. Total loss amounted to almost $34,000. How do I claim the loss on my 2023 taxes?

[KrisD15]

If you mean the tenant did not pay rent, that is not something you can claim as a loss or deduction because you can't deduct what you never got and loss is limited to theft  (again, you had something and it was taken away) or loss because of a disaster. 

IRS Topic 515

[GMLWONG]

Former tenant was formally evicted, went through the whole process... Colorado Court awarded me Writ of Restitution, transferred case to Illinois, where tenant fled to, Illinois Court awarded me their Writ of Restitution, debt and interest kept accruing... to almost $34,000 (unpaid rents, public service costs, water bill costs, late fees, eviction and Court costs, cleaning and remodeling costs, damages caused by tenant, plus Colorado Court awarded me additional $1,000 for deliberate acts of damages)

Tenant finally paid a lawyer to help them file Chapter 7 so the Illinois Court accepted and my lawyer alerted me to the closed case. Can I now claim these total losses on my taxes for 2023 since the case is closed and cannot be collected on? 

[MarilynG1 · Accepted solution]

You can't deduct unpaid rent as a loss.  However, if you enter your other Rental Expenses, and you have a Rental Loss for the year, that loss is applied against your other income.

Here's more info on Rental Loss Due to Unpaid Rent. 

@GMLWONG