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Author: TMFRobyn One star, 50 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121585  
Subject: Rental property that was never rented? Date: 3/13/2006 12:58 PM
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We moved out of our main home in January and actively tried to rent it for several months at the going market rate. After four months, we got an offer to buy the house and accepted it. Can we deduct expenses for the months it was advertised for rent? We did not make a profit on the sale of the house, so we will not be using the home-sale exclusion in any case.
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Author: ptheland Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 84936 of 121585
Subject: Re: Rental property that was never rented? Date: 3/13/2006 2:49 PM
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We moved out of our main home in January and actively tried to rent it for several months at the going market rate. After four months, we got an offer to buy the house and accepted it. Can we deduct expenses for the months it was advertised for rent?

I'd stick my neck out and say "yes."

An IRS auditor might not agree with me.

If you decide to deduct the expenses, save as much documentation as you can of your bona fide efforts to rent the house.

Plus, at any rate the largest single expense is probably the mortgage interest. Worst case, that would remain deductible on your schedule A as a second residence. (OK, the worst case is that you already HAVE a second residence and wouldn't be able to deduct even the interest.)

--Peter

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