Answering rental house questions

[poncho_mike]

I have a rental house that I've owned for a long time.   The house is about 3 hrs away, it was my first residence before I relocated for my job many years ago.  The tenant had lived in the house for a number of years, but in 2025 he started getting way behind on rent.  He kept telling me he would catch up when he got his tax refund, so I didn't evict.  Around October, I had hip surgery.  That's around the time he stopped paying rent entirely.   Some time around October, he moved to a smaller house, but didn't remove everything from the house. He didn't turn in the keys until late December, and he left a mess.

So there are a couple of questions I'm not sure how to answer.  Turbotax asks me if the house was rented all year.  The tenant only paid about 7 months of rent, but he lived there for about 10 months.  He essentially used it for free storage for a couple of months.

If the rent was paid for 7 months, occupied for 10 months, how do I answer this question?  He kept telling me he was working on getting the stuff moved, then finally told me he had nowhere to put it.

[MindyB · Accepted solution]

Since the tenant didn't give back the keys or clear out his belongings until late December, the house was technically rented or "available for rent" for the entire year. You should answer that it was rented all year because you weren't using it for yourself and it was legally occupied by a tenant until the very end. You only report the actual money you received as income, so the months he didn't pay just result in you owing less in taxes. 

[poncho_mike]

@MindyB  This question will likely come up next year.  How does Turbotax use this information?

I had hip replacement surgery in late 2025.  The house needs a lot of work, which my wife and I plan to start in the next month or so.  The house had propane heat.  The tenant didn't buy any propane in 2025, so the propane company removed the tank.  It's unlikely I can get another tank installed, I will likely need to buy a tank and bury it.  The furnace is old, so it might make sense to go ahead and replace it.  The house isn't ready to rent, but it's not being used for personal use.  It is just vacant.  How will this be treated?

[RobertB4444]

You're "preparing it to rent".  You need to track all of the costs that you have between the last day of rental and the first day that you put the house on the market in order to rent it.  All of those costs will be bundled together and become part of the depreciable basis of the property when it is available for rent.  

[poncho_mike]

I thought the costs to make repairs were just that:  repairs.  Why does this apply to the basis if I'm putting it back into the same condition it was in last time I rented.  I know the new HVAC system will have to be depreciated, but I would think things like repainting and repairs would be treated as expenses.

[ThomasM125]

You are correct, painting and repairs can be written off as expenses in the year they occur. Only costs necessary to enhance the value or extend the useful life of the property need to be capitalized and depreciated. That would be things like room additions or a new roof.