Rental Property Losses Filing Year and Rollover

[drewgen]

Previous tenant incurred significant damage on my rental property.  I made all of the repairs at the end of 2017 and have those receipts.  However, I sold the property in early 2018.  Can I claim these losses from damages in 2018 when the property was sold, or must I first claim them in 2017 taxes and then roll them over?

I ask it this way since I would prefer the deductions in 2018.  If the answer is to claim in 2017, and rollover, please include advise, if any, for doing this correctly so I don't lose them.

As a follow-up:  now that the property has been sold, can I still rollover unused deductions on losses year to year, or do they expire in the year of sale? (I also took a significant loss in 2018 on the sale price alone).

Appreciate the insight!

- Drew

[halds]

You must claim repair expense sin the year that they were incurred.  However, if your total expenses exceed total rental income for 2017, the deficit will carry over to 2018 as a passive activity loss. It will then be deducted from any profit made for 2018.

[drewgen]

That certainly makes sense.  I wanted to make sure there weren't some regulations regarding stipulations when the property is sold.  Some of those 2017 expenses were noted on the 2018 closing for example, even though paid the year prior.

You reminded me of a follow-up though.  As I will be reporting rental income, I also have a lot of unpaid rent.  Is it true I cannot deduct unpaid rent?  or perhaps, subtract it from reported rental income?  It seems like it should be allowed but I read somewhere it's not.