Hello and thank you for using Just Answer.The rent that you did not receive while the unit was empty is not a loss that can be used. Nondeductible passive activity losses (losses that exceed the income from the passive activity) for the year are "suspended passive activity losses." Suspended losses can be carried forward indefinitely and used in subsequent years against passive activity income. They are allowed in full upon a taxable disposition of the activity, i.e., when the property is sold. The rent not received is not used as a loss on the Schedule E, suspended losses are those that yo have carried forward each year (if any) that you were not allowed to use in a previous year.The selling expenses would only be those expenses that you had that were directly related to the sale.
Selling expenses include:
Legal fees, and
Loan charges paid by the seller, such as loan placement fees or “points.”