Discussion:Uncollectible Rent
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Discussion Forum Index --> Consumer Questions --> Uncollectible Rent
| 10 April 2009 | |
| I am trying to determine where to put the bad debts on rent that could not be collected from tenants. Could it be offsetted against income or list it under other expenses as a bad debts? There is no specific line for it on Schedule E. Client has inherited several apartment buildings and suffered a lot of losses from uncollected rent. | |
Rgtaxservice (talk|edits) said: | 10 April 2009 |
| Cash basis taypayers can't deduct unpaid rent as a bad debt. The unpaid rent was never claimed as income in the first place. | |
| 10 April 2009 | |
| This is a double whamy for the landlord. She lost out on a potential paying tenant and could not deduct the loss generated from the tenant that stayed and didn't pay. Is there any other creative way she could claim the loss? | |
Pink Pearl (talk|edits) said: | 10 April 2009 |
| yes there is...she needs to report the rent income that she never received and then write it off as bad debt...she then gets the deduction if that is what she wants. Or read Rg's post above and do it the correct way. | |
Rgtaxservice (talk|edits) said: | 10 April 2009 |
| What loss? Yes, she lost money in the sense that she never received what she was supposed to, but for tax purposes, she will only claim the amount of rent actually received. Think of the unpaid rent as a paper loss.
Just report the actual amount of rent she received...that takes care of the 'loss'. | |
| 10 April 2009 | |
| this is a consumer question, thus the lack of knowledge, let's be gentle or just pass it by | |
Rgtaxservice (talk|edits) said: | 11 April 2009 |
| Kevin, I was being gentle. I certainly didn't intend for it to come across in a mean spirited manner.
On a related note...if Consumers do have questions, they should just state that instead on mentioning my client. | |
| 13 April 2009 | |
| Rg- I think we also have some novice preparers posting here instead of the pro forum, hence the 'client' wording.
BMA - this is a common question from clients, even small business owners who have outstanding invoices that will never get paid. It's the difference between cash-based accounting and accrual-based accounting, with the point being that if the income was never claimed, then you haven't really 'lost' it. Keep in mind that you DO get to deduct real expenses that you incurred, so you don't end up paying out of pocket and then not being able to claim the expense. So any bills that were paid during the period in question are deductible. | |
