A vacancy changes nothing about the categories and everything about the questions. Expenses during a vacancy — advertising, utilities the landlord now pays, cleaning, repairs, improvements between tenants — are rental expenses of a property held for rent, and IRS Publication 527 lists them among ordinary deductions; the cost of getting the unit ready is split between repairs (deducted) and improvements (capitalised) under the same tangible-property tests as any other year (IRS). What the records must show is that the property was held for rent during the gap — the listing, the showings, the applications — and when each cost was incurred.
What to record during a vacancy
| Record | Content | Why |
|---|---|---|
| Availability | Date the unit was ready; listing dates; showing log; applications received | Held for rent; placed-in-service date for a newly acquired unit |
| Utilities | Landlord-paid bills for the vacant period, with meter readings at each end | Deductible; allocates usage between tenancies |
| Turnover work | Invoices split repair / improvement; photographs before and after | Deduction now or capitalisation |
| Deposit accounting of the departing tenant | Itemised list; amounts retained | Income in the year kept |
| Marketing | Listing fees, photography, signs | Deductible |
| Insurance | Vacancy clause dates; notice to the insurer if the vacancy exceeds the policy’s limit | Coverage |
| Local programs | Change-of-tenancy inspection, licence renewal, registration | City compliance |
Personal use during a vacancy
Days the owner or family use the unit are not rental days; a unit used personally between tenants changes the allocation of expenses for the year. Publication 527’s personal-use rules apply — record any such days and ask a tax professional how they affect the return.
Long vacancies
- Keep marketing evidence continuous; a unit taken off the market is not held for rent.
- Check the insurance vacancy clause — many policies narrow coverage after a stated number of vacant days.
- Keep heating in winter and dehumidification in summer; document it — an empty house still has pipes and walls.
- Review the rent against public data (Census medians and HUD fair market rents on the city guides) before deciding the vacancy is the market’s fault.
Frequently asked questions
Are expenses during a rental vacancy deductible?
Ordinary and necessary expenses of a property held for rent — advertising, utilities, maintenance, repairs — remain deductible during a vacancy; improvements are capitalised (IRS Publication 527, IRS).
What proves the property was held for rent?
Listing dates, showing logs and applications received during the gap; keep them with the year’s records.
Does a long vacancy affect insurance?
Often — policies narrow coverage after a stated vacancy period; check the clause and notify the insurer where required.
Sources
Rules change and the right answer can depend on the home, the city, the lease and the timing. These are the official pages this guide relies on; check them before signing, charging a fee, sending a notice or making a legal decision.
- IRS Publication 527 (2025) — Residential Rental Property ↗
- IRS — Tangible property final regulations (de minimis, small taxpayer and routine maintenance safe harbors) ↗
- IRS — Tips on rental real estate income, deductions and recordkeeping ↗
- IRS — How long should I keep records? ↗
General information for U.S. landlords, with a Texas focus. This guide is not legal, tax or accounting advice. Consult a qualified professional for your situation. Written by the rentalfreelease.com Editorial Team; last reviewed September 19, 2026.