Can you deduct expenses on a vacant rental property?

What the IRS says about vacancies

Publication 527 has a section on vacant rental property. If you hold the property for rent and it sits empty between tenants, you may still deduct ordinary and necessary expenses such as insurance, property tax, utilities you pay, repairs and depreciation. What you cannot deduct is lost rent: income you did not earn is not a loss you can claim.

Held for rent is the test that matters. A unit that is listed, priced at a realistic rent and shown is held for rent. A unit you have taken off the market for your own use, or are keeping only to sell, is not.

When you list it for sale

Publication 527 says that while a property is listed for sale and is not available for rent, its expenses are not deductible rental expenses. If you keep it available to rent while it is listed, talk to your preparer about how your facts fit. Write down the dates the unit was and was not available.

What to record for a vacant unit

• The listing date and the asking rent, with a screenshot of the ad.
• Every cost while empty, with the unit number in the memo, so the cost lands on the right property.
• Turn work, split into repairs and improvements, because improvements are handled differently from repairs.
• The day the new lease starts, so you can show how long it sat empty.

Example a made-up unit is empty for 45 days. Insurance share $90, utilities $135, a $320 paint and cleaning job and a $50 listing fee total $90 + $135 + $320 + $50 = $595 of expenses. At $1,400 rent, the 45 days of missed rent is about $2,100, which is not an expense and does not appear in the books at all.

The last point is the one owners miss: a vacancy shows up as lower income, not as a line you deduct.

Showing that the unit was held for rent

If your return is ever questioned, you want proof that a vacant unit was available. Keep the listing, the asking rent and the dates in one place, and keep the messages with people who asked about the unit. A listing at a rent far above the market, or one that is never shown, looks less like a rental.

• Keep each listing's start date and every price change.
• Save inquiry messages and showing dates.
• Keep the turn invoices and the date the unit was ready.
• Note any period the unit was off the market, and why. A unit being repaired is still held for rent. A unit a family member lives in is not.

The same records answer a lender or buyer who asks why a unit sat empty. They also help you see which vacancies were long and what to change next time, and our guide to the cost of a vacant apartment shows how to put a number on it.

Questions to bring to your tax preparer

• Was the unit held for rent on every day it sat empty, and do I have the listing to show it?
• Should the turn work be a repair or an improvement for this unit?
• Does anything about a family member or guest staying in the unit change the answer?
• How should I treat a unit that was listed for sale and for rent at the same time?

How DoorKeeping handles it

DoorKeeping keeps expenses by property and by Schedule E line, so a vacant unit's costs are already sorted. DoorKeeping gives no tax advice. Your tax preparer decides how a rule applies to you, and your state may add its own rules.

Sources

1. IRS, Publication 527, Residential Rental Property, read Oct 30, 2026
2. IRS, Instructions for Schedule E (Form 1040), 2025, read Oct 30, 2026

Questions

Can I deduct the rent I could not collect while the unit was empty?

No. Lost rent is not a deductible expense. Expenses you pay to keep the unit ready and rentable are.

Are expenses deductible if the unit is listed for sale?

Publication 527 says expenses of a property listed for sale and not available for rent are not deductible rental expenses.

Does depreciation continue while a rental is vacant?

Publication 527 includes depreciation among the expenses you may deduct on a vacant rental held for rent.