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Rental Expense Deductions

2019 – 01/03 The U.S. Tax Court denied a taxpayer’s deductions for rental expenses (mortgage interest and depreciation deductions) and legal and professional fees. It found that the taxpayer’s evidence didn’t support the claimed deductions, but seemed largely connected to her son’s divorce proceedings. Tax law allows a deduction for ordinary and necessary expenses related to rental property. But the court ruled it “fiction” that the two residences in question were rentals, because only the taxpayer, her husband and her son occupied them. (TC Memo 2018-203)

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