Do I need to fill out Schedule E if my rental property had zero rental days this year?

You're asking a great question about Schedule E! Even though your property had zero rental days in 2024, your CPA is likely correct to include Schedule E. Here's why: If you owned a rental property that was previously used as a rental and then sold it, you still need to report certain expenses on Schedule E - things like property taxes, mortgage interest, and any other expenses you incurred while the property was held for rental purposes (even if it wasn't actually rented during that time). The IRS wants to see the complete picture of your rental property activities, including properties that were held for rental but not actually rented. This creates a paper trail showing the property's transition from rental status to sold.

After struggling with a similar situation last year, I found this amazing tool called taxr.ai (https://taxr.ai) that helped me understand my rental property reporting requirements. I uploaded my previous tax returns and property documents, and it analyzed everything and explained exactly why I needed Schedule E even for a property that wasn't actively rented. The tool breaks down IRS guidelines in plain English and shows you which forms apply to your specific situation. It even flagged some deductions my previous accountant had missed from the months I owned the property before selling it.

I tried taxr.ai after seeing it mentioned here and wow - it actually answered my Schedule E question perfectly! Uploaded my previous return and it immediately flagged that I should be using Schedule E for my vacant rental even with zero rental days. The explanation was super clear - since the property was still classified as a rental property (even though vacant and under contract), all expenses should go on Schedule E rather than Schedule A. It even showed me which specific expenses I could still claim during that "in limbo" period before selling. Really helped me understand why my tax software was flagging errors in my return. Saved me from potentially misreporting and having to file an amendment later!

If you've been trying to contact the IRS to get clarification on Schedule E requirements, good luck! I spent 3 weeks calling repeatedly and couldn't get through. Then I found this service called Claimyr (https://claimyr.com) - they have this system that gets you to the front of the IRS phone queue. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c I was honestly skeptical at first, but I was desperate for answers about my rental property tax situation. Within an hour of using Claimyr, I was talking to an actual IRS agent who confirmed that Schedule E is indeed required for rental properties with zero rental days if they were previously rentals and were held for rental purposes during part of the year.

Alright, I need to apologize for my skepticism about Claimyr. After posting my comment, I decided to try it anyway since I'd been struggling to get through to the IRS about my rental property sale. I was SHOCKED when I actually got a call back connecting me to an IRS rep in about 45 minutes. The agent confirmed exactly what everyone here was saying - Schedule E is indeed required even for rental properties with zero rental days if they were still considered rental properties during part of the year. The agent explained that the Schedule E creates a clean record showing the transition from rental property to sold property, and allows you to properly deduct expenses during the holding period. This was exactly the official confirmation I needed before filing!

One important thing to consider - make sure your CPA is reporting the eventual sale of the property correctly. Since it was previously a rental, the sale should be reported on Form 4797 (Sale of Business Property), not on Schedule D where personal residence sales go. Also, check if they're handling depreciation recapture correctly. Even for the months you held it in 2024 with zero rental days, there might be depreciation implications if you claimed depreciation in previous years.

Somewhat related question - I have a property that I've been trying to rent out, but haven't found tenants yet. It's been vacant all year while listed for rent. Should I still be filling out Schedule E for this year even though I've had zero rental days and zero income?

Your CPA is absolutely correct to include Schedule E even with zero rental days! This is actually a common misconception that trips up many rental property owners. The key point is that Schedule E is required when you hold a property for rental purposes, not just when you have actual rental income. Since your property was previously a rental and you owned it during part of 2024 (even though it was vacant and under contract), it maintained its rental property status for tax purposes. Here's what you can still report on Schedule E even with $0 rental income: - Property taxes paid during the ownership period - Mortgage interest (if any) - Insurance premiums - Maintenance and repairs - Property management fees - Depreciation for the months you owned it - Other ordinary and necessary expenses related to holding the property This creates a proper paper trail showing the property's transition from rental to sold status, and ensures you're capturing all legitimate deductions during your ownership period. It also sets up the proper classification for when the sale gets reported (likely on Form 4797 as business property rather than Schedule D as personal property). Don't ask your CPA to remove it - she's following the correct tax treatment for your situation!