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Zip Taxes
Zip Taxes, Tax Preparer
Category: Tax
Satisfied Customers: 156
Experience:  CTEC Licensed / Mgmt Experience with H & R Block... Self Employed since 1986 Experienced in all Scheds
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I have a client that owns rental property for several years

Resolved Question:

I have a client that owns rental property for several years but have never had any rental income. Does this in itself make it a passive activity or can they still claim RE losses each year?
Submitted: 6 years ago.
Category: Tax
Expert:  Zip Taxes replied 6 years ago.

Zip Taxes :

Welcome to Just Answers, I will do my best to Answer your Question.

Zip Taxes :

They can claim the loss every year on their schedule E... but here are some questions to answer

Zip Taxes :

Was anyone living in them?

Customer:

No

Zip Taxes :

Why vacant?

Zip Taxes :

No renter's

Zip Taxes :

did they advertise them?

Zip Taxes :

or were they rehabing the property

Customer:

I really don't know why they continue to pay taxes mortgage etc without a tenant.

Customer:

They don't advertise

Zip Taxes :

ok

Customer:

No, not rehabing

Zip Taxes :

Well, it is a loss with out income

Customer:

It doesn't make sense but I have three years of back taxes with no rental income shown

Zip Taxes :

but there's a warning that after 5 years of taking losses, IRS will look into it

Zip Taxes :

I would expense them out for each year

Zip Taxes :

and if they did maint on the prop, that too

Zip Taxes :

vacancies in AZ are common so most likely no red flags there

Zip Taxes :

Though when they sell the properties, the losses become gains

Zip Taxes :

recapping the losses... but if they need the write off then it's best to write off

Zip Taxes :

I hope I have been helpful :)

Customer:

Thanks

Zip Taxes :

Are you amending the previous years...?

Zip Taxes :

I hope the best for them... but they should get people in there... if they can.

Zip Taxes :

Please hit the green Accept button when satisfied with your answer, if you have any other question, please let me know.

Zip Taxes :

Thaks

Zip Taxes :

Thanks

Zip Taxes :

George

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