I have a question about tax deductions for rental property. We only collected rent for our rental property for 10 months out of the year. Can we claim the mortgage for the other two months as an expense?

Tax deductions for rental property only include the time when the property is earning rental income for you. You can't claim your entire mortgage payment as a rental expense at any time. You recover your payments for the house through depreciation. You can’t recover it by deducting the actual mortgage payments.

You can deduct the portion of the mortgage payments that relate to interest on the mortgage. This includes months when you offered the property for rent but no one rented it. However, you can never deduct the principal portion of the payments.

You can also deduct any of the ordinary and necessary costs to rent the property. Deduct these on Schedule E. These costs include:

  • Real estate taxes
  • Advertising
  • Maintenance

If your rental property is vacant, you usually can't deduct the lost income. However, you might be able to if you included those payments as income in a prior year. Lost income that you previously included in income is a bad debt expense. Claim it in the year it becomes uncollectible.

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Calculators

So how much will you get (or owe) this year? That’s the million-dollar question. We happen to have three very useful calculators to help you estimate your refund or balance due.

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