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).
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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.
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