A tenant moved into my house on 1/1/2015.
He paid rent for the months of January, February, and March.
Starting in April, he refused to pay rent.
The eviction case ran it course from 4/1/2015 to 7/1/2015.
From 4/1/2015 to 7/1/2015, he continued to live in my house, but never paid any rent.
He was evicted on 7/1/2015.
Do April, May and June count as "Fair Rental Days" or "Personal Use Days"?==========>>>fair rental days; it was still available for rent all those months even if it was not generating rental income. Rental Property that is 100% rental, and is occupieid but not generating rental income is considered as in use.
Schedule E instruction https://www.irs.gov/pub/irs-pdf/i1040se.pdf
page 5, middle column, 2nd paragraph says:
"A day of personal use is any day, or part of a day, that the unit was used by:
Anyone who pays less than a fair rental price for the unit"
A fair rental price is $2000/month specified in the rental contract. If he paid $0/month, does that mean "he paid less than a fair rental price"?
I think the answer is absolutely "yes". $0 is less than $2000.If the answer is "yes", then according the above statement by IRS, are April, May and June "Personal Use" days?==>.No as said above; you IENTIOALLY did NOT rent at less than Fair Market Value of $2K/ month. If so, these are personal use days. The rent received counts as income but the expenses don?t qualify as deductions;since you hold property for rental purposes, you are be able to deduct your ordinary / necessary expenses including depreciation for managing, conserving, or maintaining the property even while the property is vacant even if you did not get paid.
Note; aslongas you are a cash basis TP, then, You can't claim unpaid rent on your rent;. Rental income not received is not a deductible expense for a cash basis taxpayer.however,If you are an accrual method, report income
when you earn it. I mean If you are unable to collect the rent, you may be able to deduct it as a business
bad debt. Plz read below.As a landlord, you can write off unpaid rental debt. A write-off, also called a charge-offmeaning you declare a debt as a loss on your taxes.As you are a sole proprietor, any financial expenses, such as outstanding rental debt, will appear on your personal tax return on 1040. Since the unpaid rental debt is an expense, it may reduce the amount of your taxable income. This may result in a smaller tax bill due the IRS. If you operate your rental property under a business, such as a s ? or c- corp, the write-off of the unpaid debt will appear on your business tax returns instead of your personal tax return. The debt will generally reduce your business income and result in a reduced amount of business earnings for that period. If your total business deductions exceed your total business income, the irs considers this as a Net Operating Loss. This may result in you not owing any business taxes at all for that period. Although you can still pursue the collection of a written-off debt, you're not required to do so. If you believe pursuing collection of the debt is not cost-effective due to the amount of the debt, or the evicted tenant's inability to pay, you can dispose of the debt through debt forgiveness. When you "forgive" a debt, you abandon collection efforts of the debt in its entirety. You then report this forgiven debt to the irs and issue a 1099-C form to the debtor. The unpaid rental debt is now considered income to the debtor and he may have to pay taxes on that amount to the irs.