Loss of rental income

Landlords from time to time have to deal with problem tenants. In some instances, a tenant moves out without paying rent.

Although the landlord cannot deduct any loss of rental income, he or she is able to deduct expenses for managing, conserving, or maintaining the property while the property is available for rent even if the tenant has moved out.

Taxpayers who own and actively participate in a rental real estate activity may offset up to $25,000 of against. Generally, a taxpayer actively participates if he makes significant and bona fide management decisions, such as approving new tenants, deciding rental terms, and approving capital expenditures. To qualify, a taxpayer must also own at least 10 percent by value of all interests in the property.

The $25,000 offset amount is reduced by 50 percent of the amount that a taxpayer's adjusted gross income is more than $100,000.

If this active participation rule is not met, then such expenses may only be deducted with future rental income.