I sold a property at the end of 2015, but had a legal dispute with a former tenant and incurred legal fees and such in 2016. How can I deduct legal fees incurred trying to recoup damages to the property - there was not damage recovered in 2016 (no income to offset expenses against in 2016).
Generally,you can deduct attorney or accounting fees that are necessary to produce or collect taxable income.
The expenses must be directly related to the income or income-producing property, and the income must be taxable to you.
The deduction for most income-producing expenses is subject to a 2% limit that also applies to certain other miscellaneous itemized deductions.
The amount deductible is limited to the total of these miscellaneous deductions that is more than 2% of your adjusted gross income.