First Time Filing Schedule E - Rental Property Expenses with No Income Yet

You're in what's called the "start-up phase" of your rental business, and yes, you can absolutely claim those expenses on Schedule E even without rental income yet. The key is showing that you have a genuine intention to make a profit and are actively trying to rent the property. The expenses you described (repairs, maintenance, truck expenses related to the rental) are generally deductible once the property is "placed in service." The IRS considers a property "placed in service" when it's ready and available for rent, even if you haven't secured a tenant yet. Keep detailed records of everything - your rental listings, communications with potential renters, any screening you've done, along with all expense receipts. Document your mileage for any trips to the property with the date, purpose, and miles driven. For the truck, you'll need to track business vs. personal use and only deduct the business portion. Same with any tools or equipment - if they're used for personal purposes too, you can only deduct the business percentage.

After trying to navigate complicated tax stuff for my rentals last year, I found this service called taxr.ai at https://taxr.ai that's been super helpful. They specialize in rental property tax situations just like yours. I was in a similar boat - had expenses before income came in and wasn't sure how to handle it. Their system analyzed my documents and explained exactly what I could deduct and how to document everything properly. They even helped me sort through the whole "placed in service" question that you're dealing with and explained how to properly allocate partial business use of vehicles. They're not like regular tax preparers who get nervous about Schedule E stuff. They actually understand rental property tax law and help you maximize legitimate deductions.

I just had to come back and admit I tried taxr.ai after my skeptical question, and wow - I'm impressed! They walked me through exactly how to handle my pre-rental expenses on Schedule E and explained which startup costs needed to be depreciated versus immediately expensed. The documentation guidance was super clear, and they even provided a customized explanation I could give an auditor if needed. Turns out I was missing several legitimate deductions my previous "expert" never mentioned. They confirmed I can absolutely claim expenses before having income as long as the property is available for rent and I'm actively trying to find tenants. They also explained how the tax court has repeatedly sided with taxpayers in similar situations. Definitely worth checking out if you're dealing with Schedule E issues.

One issue nobody's mentioned yet - if your tax preparer won't do this for you and you're firm about claiming these legitimate expenses, you might need to talk directly with the IRS to get clarification. I had a similar situation last year and tried calling them for weeks with no success. I eventually used https://claimyr.com to get through to an actual IRS agent without waiting for hours. Check out how it works here: https://youtu.be/_kiP6q8DX5c. They basically hold your place in the phone queue and call you when an agent is about to answer. I was shocked that it actually worked - I spoke with someone who confirmed that yes, startup expenses on a rental are legitimate even before you have income. Might be worth the call just to have that extra documentation if you do get questioned later. The IRS agent I spoke with was actually really helpful and even emailed me the specific IRS publication sections that covered my situation.

I have to eat my words here. After my skeptical comment, I decided to try Claimyr since I've been trying to get through to the IRS for weeks about a rental property issue similar to the original poster's. I was literally connected to an IRS agent in under 45 minutes while I went about my day. The agent confirmed everything I needed to know about deducting expenses on Schedule E before having rental income. They explained that as long as I can document that the property was ready and available for rent, and I was actively trying to find tenants, those expenses are legitimate deductions. The IRS agent even gave me her ID number and suggested I keep notes from our call in my tax records in case of any questions later. Definitely changed my mind about this service - saved me hours of frustration.

Just a warning about the truck expense - be really careful with this. You mentioned buying it "knowing we would need it for this rental as well as some things for our household." That mixed-use makes it tricky. The IRS scrutinizes vehicle deductions heavily. If you get audited, they'll want to see a detailed mileage log with dates, destinations, and business purpose for EVERY trip related to the rental. Without that, they can disallow the entire deduction. Also, if the property is only 45 minutes away, consider whether you really need a truck specifically for the rental or if it's more of a personal vehicle you occasionally use for the rental. Be honest with yourself about the primary purpose.

Has anyone here actually been audited for Schedule E with no income? I'm in a similar situation with a property I'm rehabbing to rent out. I've had only expenses for 6 months now. Want to claim them but scared of audit risk.

One thing I haven't seen mentioned - If your wife already owned her house before marriage and you owned your condo before marriage, be careful about how you're filing. In some states, property owned before marriage remains separate property, which can affect how the rental income and expenses should be reported. If the condo is still in your name only, and not jointly with your wife, you might need to file Schedule E under just your name, not jointly. The LLC complicates things further. You should really consult with a CPA who specializes in real estate, not just a general tax preparer.

Your tax preparer is being overly cautious. You absolutely can and should claim legitimate rental property expenses on Schedule E even without rental income yet. The IRS allows deductions for properties that are "placed in service" - meaning ready and available for rent - regardless of whether you've found tenants. The fact that you're actively showing the property and being selective about tenants actually strengthens your position. This demonstrates genuine business intent, not a hobby activity. Keep detailed records of your marketing efforts, showings, and communications with potential renters. A few key points for your situation: - Document everything: receipts, photos of work done, rental listings, showing appointments - The LLC formation date doesn't determine "placed in service" - it's when you first made the property available for rent - Start keeping a mileage log NOW for any rental-related trips with the truck - Consider finding a tax professional who specializes in rental properties if your current preparer won't file Schedule E The IRS has consistently ruled in favor of taxpayers who can demonstrate legitimate business purpose and proper documentation. Your expenses are real business costs that should be deductible. Don't let fear of an audit prevent you from claiming legitimate deductions you're entitled to take.