What can you deduct on a vacant rental property?
If the unit is held for rent and available to rent, you can generally deduct the ordinary and necessary costs of keeping it, including depreciation, while it sits empty. You cannot deduct the rent you did not collect. The key is that the unit must still be held out for rent, which is where the paperwork matters.
What the IRS says about vacancy
IRS Publication 527 says that 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. It also says you cannot deduct any loss of rental income for the period the property is vacant.
So there are two buckets. Costs you actually pay to keep the unit in shape are deductible. The rent you might have earned is not a cost, so there is nothing to deduct for it. Lost rent shows up as lower income, not as an expense line.
What usually counts while a unit is empty
| Cost while vacant | Usually deductible? | Where it goes |
|---|---|---|
| Utilities you pay to keep the unit usable | Yes | Utilities |
| Insurance on the building | Yes | Insurance |
| Property tax | Yes | Taxes |
| Mortgage interest | Yes, subject to the usual loan rules | Mortgage interest |
| Lawn care, pest control, cleaning for the next tenant | Yes | Repairs, cleaning, maintenance |
| Depreciation on the building | Yes, while it is ready and available for rent | Depreciation |
| Rent you would have collected | No | Not a cost |
Example a made-up unit is vacant for two months at $1,500 rent. Costs while empty: utilities $240, lawn care $160, cleaning $200 and its share of insurance $120. That is $720 of costs, which are deductible. The $3,000 of rent you did not collect is not deductible. Check: 2 months times $1,500 is $3,000.
The mortgage interest, property tax and depreciation on the unit continue whether or not it is rented, and they are already part of your yearly figures. Do not add them again as vacancy costs.
The condition: the unit must be held out for rent
Deductions during a vacancy rest on the property being held for rent. Publication 527 also says you can deduct ordinary and necessary expenses of managing, conserving or maintaining rental property from the time you make it available for rent, and that you can begin to depreciate rental property when it is ready and available for rent. If the unit is not ready or not offered, those costs may follow other rules.
- Keep a dated listing, an advertisement or a note of when the unit was ready to show.
- Keep price changes and showing records. They show you are trying to rent it.
- Do not use the unit for yourself or family during the vacancy without telling your preparer. Moving into your rental explains how personal use changes things.
Work done before a unit is first placed in service for rent follows different rules, covered in repairs before the rental is placed in service.
If the vacant unit is for sale instead
Publication 527 says that if you sell property you held for rental purposes, you can deduct the ordinary and necessary expenses for managing, conserving or maintaining it until it is sold. It adds that if the property is not held out and available for rent while it is listed for sale, the expenses are not deductible rental expenses.
A rental unit you list for sale and also keep advertised for rent is in a different position from one you take off the rental market. Make that choice on purpose and write it down. Your preparer will ask which one it was.
How to keep the books for a vacant unit
- Record the move-out date and the date the unit was ready to rent.
- Code each vacancy cost to the same expense accounts as when the unit is occupied, tagged to the unit. You do not need a separate vacancy account for tax.
- Track a separate running total of vacancy costs per unit, so you know what each empty month costs. The cost of a vacant apartment per day shows how.
- Do not book anything for the rent you did not collect.
How DoorKeeping handles it
DoorKeeping shows vacant units on the rent roll and keeps each property's expenses in its own ledger, with expense accounts that map to Schedule E lines. Ask Claude or ChatGPT what a unit has cost while empty and it can total the bills coded to it. DoorKeeping does not hold your rent and does not give tax advice, so check with your preparer when a vacant unit is also listed for sale or used by family.
Sources
- IRS, Publication 527, Residential Rental Property (2025), read Oct 30, 2026
Questions
- Can I deduct expenses on a rental that has no tenant?
- Generally yes, while it is held for rent and available to rent. The IRS says ordinary and necessary expenses, including depreciation, may be deductible during a vacancy.
- Can I deduct the rent I lost while it was empty?
- No. Publication 527 says you cannot deduct a loss of rental income for the period the property is vacant.
- What if the vacant unit is listed for sale?
- You can deduct upkeep costs until it sells, but if it is not held out and available for rent while listed, those costs are not deductible rental expenses.