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we bought 2nd home in 2006 to rent to our son. Our son was not able to pay any rent this year. what amounts can I claim as a loss/expense as a rental property on federal income tax? only remodeling/maintenance, insurance, upkeep? or the amount of monthly payment?

2 Thoughts on what items qualify as loss/expense on rental property?
  1. Reply
    Bettina C
    August 1, 2012 at 3:33 am

    This is a tricky one.
    Since your son did not pay any rent, it’s hard to justify that it’s a rental property. Even if he paid rent, did you charge him market rent? That’s another issue the IRS will look at in transactions not at arm’s length.

    My suggestion is to claim the property as a second home and deduct mortgage interest and property taxes on your Schedule A. None of the other items are deductible though.

    Whether you could claim a loss on the rental property would also depend on your income, since you can’t deduct any real estate losses if your AGI is above $ 150,000.

    In your situation, I’d contact a CPA to assess what’s best for you.

  2. Reply
    August 1, 2012 at 3:57 am

    It’s not eligible as rental property since you aren’t trying to make a profit from it, and especially since you didn’t charge your son rent this year.

    If it were rental property, then the remodeling, maintenance and upkeep would be deductible. The monthly payment would not be.

    The other responder’s suggestion to contact a CPA for advice. There is enough about the situation that’s gray areas that two CPA’s may have somewhat different advice.

    As the other responder said, you might be able to call it a second home and still take the real estate taxes and mortgage interest on your schedule A – calling it a second home, since you don’t live there at all, is a little shaky – and if you collected any rent on it, all sorts of additional rules kick in.

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