Unpaid damanges to my rental home and unpaid rent

[jawckey]

I happened to rent my home to an unworhy tenant. Instead of staying there himself, he put some other folks in my home. And they damanged the home pretty bad. I had to go to court for eviction finally to get out of the ordeal. In the bargain this is what happened.

- Renter deposited a security deposit of one month rent and a small cleaning deposit.

- Court ordered evicttion by the end of April 2025.

- But unauthorized occupants did not move out till end of May 2025.

- Rent is supposed to be paid in advance on 1st of each month.

- But the tenant did not pay the rent on 1st of May, 2025.

- But the unauthorized occupants stayed the full month of May 2025.

- And the unauthrorised tenents damanged the property for which I had to spend out of my pocket.

So the secutity deposit, and the cleaning deposit did not cover the damage expenses come the rent of month of May. Please clarify the following.

- It is not like 'lost rent' but 'unpaid rent' and 'unpaid damages'.

- Can I claim such unpaid rent and damanges as bad debts or loss agaist my 2025 tax return when I file it in 2026?

- If I can how and where do I enter it in my turbo tax premium (if you use 2025 version as example for menus).

Appreciate help. regards

[VolvoGirl · Accepted solution]

You can only deduct your actual out of pocket expenses.  You can’t deduct income you never got.  You will just have less income to be taxed on.  You take the loss by deducting your expenses, but not your time or labor.   

[NCperson]

@jawckey everything is based on the cash in and the cash out.

if you did not receive the rent, you can't deduct that.  No cash transacted. 

the money you spend to clean up the damages are a claimable expense.  Cash transacted

But if you didn't spend the money to clean up the damage, there is nothing to deduct. No cash transacted