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Vacant Property

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PrettyMindMe

Junior Member
What is the name of your state? California

I have a question about the expenses of a rental property which was vacant for the whole year in 2004. The property was rented in 2002 and 2003. Then it has been left vacant in 2004 due to repair works. I know that depreciation cannot be claimed in 2004 because the property was not available for rental. But what about the other expenses like mortgage interest, property tax, insurance, etc?

I have asked this question on another tax board but I have gotton conflicting answers.
One person said since the property was not available for rental and taken off the rental market, it should be considered as an investment property in 2004. Therefore, the mortgage interest, property tax, insurance, etc should be considered as investment expenses and itemized on Schedule A.

But another person said even though the property was not available for rental in 2004, if the primary purpose of the owner was still to use the property to engage in a rental activity, the mortgage interest, property tax, insurance should still be considered as rental expenses and claimed on Schedule E.

It would be greatly appreciated if the tax professionals on this board can share your opinions.
 



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