Deducting expenses on a vacant rental

By Tom, CPA · Updated October 27, 2026

Part of: Rental Property Taxes

TL;DR: A vacant rental is still a rental if you are actively holding it out for rent. Ordinary expenses and depreciation remain deductible while it is empty, but lost rent is not. When you stop offering it for rent, for example to sell it or use it yourself, the rental expenses stop and depreciation stops. Long vacancies and below-market listings invite questions, so keep proof.

Educational only, not tax, legal, or investment advice. Examples are illustrations, not predictions. Rules and limits change; verify current figures and talk to a qualified professional about your situation.

Your tenant pays the mortgage; the IRS pays for the roof (eventually, over 27.5 years). When there is no tenant, you pay the mortgage. The good news is that the IRS usually still lets you deduct it.

IRS Publication 527 is direct: 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 it is vacant. However, you cannot deduct any loss of rental income for the period the property is vacant. The fine print is the phrase "hold property for rental purposes."

CPA Warning Label: Empty is fine. Abandoned is not. The difference is a listing, a market price and a paper trail.

Held out for rent

The question is intent and action: are you genuinely trying to rent it? Factors that support "held for rent":

• an active listing on rental sites, a sign, or a property manager agreement;
• an asking rent near market, with comparable listings to show it;
• responses to inquiries and showings;
• the property is in rentable condition, or repairs are underway to get it there;
• a history of renting it.

While these are true, deductible expenses during the vacancy include mortgage interest, property taxes, insurance, utilities you pay, HOA dues, lawn care and snow removal, advertising, management fees, travel to show the property, and depreciation. See rental property deductions.

Lost rent is not a deduction. Cash-basis landlords never included it in income, so there is nothing to deduct. The same goes for uncollected rent from a tenant who moved out without paying.

Long vacancies

No IRS rule sets a maximum vacancy. A six-month vacancy in a slow market, with an active listing, is still a rental. But the longer it sits, the more the facts matter:

• Price. A listing far above market rent suggests you are not really trying. If it does not rent after a few months, lowering the price is evidence of real intent.
• Personal use. Using the property yourself during the vacancy, even for a few weeks, can bring in the vacation-home rules of section 280A, which split expenses between personal and rental days and may limit deductions. See vacation home rental rules.
• Passive losses. A vacant rental often produces a loss. It is still passive, subject to the $25,000 allowance and its phaseout. See rental losses and W-2 income.
• Not-for-profit risk. If a property is rarely rented and losses repeat for years, the IRS can question whether it is held for profit at all (section 183). Rentals that are seriously marketed and occasionally vacant are a different situation from a beach house listed at triple market rate.

Repairs during vacancy

Vacancy is the natural time for maintenance. The tax rules are the same as with a tenant:

• Repairs that keep the property in normal operating condition (painting, patching, fixing a leak, replacing a few broken tiles) are deductible in the year paid.
• Improvements that are a betterment, restoration or adaptation (a new roof, a kitchen remodel, a new HVAC system) are capitalized and depreciated. Under the tangible property regulations (Reg. 1.263(a)-3), doing many repairs at once during a remodel can turn them into part of the improvement.
• Safe harbors still apply: the routine maintenance safe harbor, the de minimis safe harbor ($2,500 per invoice or item without an applicable financial statement), and the small taxpayer safe harbor for buildings with an unadjusted basis of $1 million or less.

If the property is taken off the market for a major renovation, it is not available for rent during that period. Publication 527 and the improvement rules tend to capitalize costs incurred while the property is out of service for the improvement. Depreciation on the building generally continues while the property is temporarily idle. See repairs versus improvements.

Selling while vacant

Many vacancies end with a sale. The tax answer changes the moment the property stops being held for rent:

• Listed for rent and sale at the same time: if it remains genuinely available for rent, rental treatment can continue.
• Listed for sale only: Publication 527 explains that if the property is no longer held for rental, the expenses are not rental expenses. Costs after that point that relate to the sale, such as staging and commissions, reduce the amount realized. Carrying costs are generally not deductible as rental expenses.
• Depreciation stops when the property is retired from service, including when it is no longer held for rent.

Illustration: Larry's tenant leaves June 30, 2026. He lists it for rent at market for July and August (vacant). On Sept 1 he decides to sell and removes the rental listing. Assumptions: monthly interest $1,100, taxes $400, insurance $150, utilities $120, building depreciation $9,000 a year.

• July and August: rental expenses of about $3,540 plus about $1,500 of depreciation (using a month-by-month approximation; actual mid-month convention applies in the year of disposition).
• From Sept 1: interest, taxes and insurance are not rental expenses. Property taxes may still be itemized on Schedule A subject to the SALT cap; the mortgage interest is generally not deductible as personal interest unless the home is a qualified residence.

When the sale closes, suspended passive losses from that rental are released if the sale is fully taxable to an unrelated buyer. That often makes the timing question less painful than it looks.

Evidence

Keep a vacancy file for each empty period:

• dated screenshots of listings and the rent asked;
• emails or texts with prospective tenants and showing logs;
• comparable rents from the same period;
• property manager reports or the listing agreement;
• receipts for advertising, cleaning and repairs;
• a note of when and why the listing was changed or pulled;
• the dates of any personal use, even a weekend, because they change the vacation-home math;
• photos showing the property's condition when the vacancy began and ended.

Vacancy and your other tax rules

A vacancy can move other numbers:

• Short-term rental average stay. For a vacation rental, empty days are not rental days and do not count toward the average period of customer use. Only actual rental periods count.
• Vacation-home day counts. Days the property is held out but not rented are neither rental days nor personal days under section 280A. Only days you use it yourself, or let family use it below fair rent, are personal days.
• QBI safe harbor. If you rely on the Rev. Proc. 2019-38 safe harbor, the 250-hour test still has to be met. Vacancy reduces services, so a long vacancy can make the safe harbor harder to meet that year. See the QBI rental safe harbor.
• Insurance. Many landlord policies limit coverage after the property is vacant for a set period, commonly 30 or 60 days. A vacancy endorsement costs money but is deductible; an uninsured loss on a vacant building is a casualty loss at best. See rental property insurance.
• Property manager fees. Many managers charge a leasing fee when a new tenant signs. That fee is generally deductible in the year paid for a cash-basis landlord, though a fee that covers a lease longer than 12 months may need to be spread over the lease term.
• Advertising and listing costs. Listing fees, photos and signs during the vacancy are deductible rental expenses.
• Utilities. Utilities you pay to keep the property heated and shown are deductible during a held-for-rent vacancy.

With this file, a vacancy is easy to defend. Without it, a long vacancy plus a large loss looks like a personal holding with a tax deduction attached. See rental records for retention periods.