Crucial Tax Tips for Landlords, #10
Deduct Losses Even If No Expenses
Losses incurred because of a casualty, disaster, or theft may be tax-deductible. A casualty is a loss of property (including damage and destruction) due to a sudden event that is identifiable, unexpected, and unusual. These losses may be limited, but they are deductible as a rental activity expense.
For example, your tenant runs their car through the garage door. Even though you havent replaced the garage door and dont have any expenses because you didnt fix anything, you can deduct the cost of damages incurred as a casualty expense.
Casualty losses on rental property are reported on Schedule A from IRS Form 4684, and are not subject to the 2% AGI limitation or $100 deduction.
Everyone’s tax situation is different, and this information should not substitute professional advice. Taxpayers should always consult with their tax advisors to consider specific factors that might affect their situation.
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