residential rental property no income for year during renovation

[LSTAX]

Residential rental property has zero income since it was out of services all year for a renovation and will be put back in service in the future.   Depreciation for the year results in a loss for this one property.

Pub 527 states:

Vacant rental property. If you hold property for rental purposes, you may be able to deduct your ordinary and necessary expenses (including depreciation) for managing, conserving, or maintaining the property while the property is vacant. However, you can’t deduct any loss of rental income for the period the property is vacant.

What entries do you need to make in Lacerte to stop the loss from being taken?  There are multiple rental properties and passive activities (K-1s) with positive income and Lacerte subtracts the loss of this one rental on form 8582.  Is there a way to stop the loss from being taken in the current year and have that loss carry forward for a future sale or positive income? 

[TaxGuyBill · Accepted solution]

You can't deduct the loss of rental INCOME, but you CAN deduct allowable expenses.

If the property was just temporarily idle for the renovations (and no personal use), then depreciation and other expenses are allowable.

[LSTAX]

It looks like I was interpreting the pub 527 sentence incorrectly - I never imagined someone would try to deduct an amount for rent they could have received.  

So no special entries needed in Lacerte for this - the loss caused by depreciation is valid.

Thank you!

[TaxGuyBill]

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@LSTAX wrote:

It looks like I was interpreting the pub 527 sentence incorrectly - I never imagined someone would try to deduct an amount for rent they could have received.

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Just visit the TurboTax forum, and you'll see A LOT of people asking about trying to do that and similar things.   LOL.  😂