Fair Rental Days 2021?

[Andrew Shippy]

I put my house up for rent mid November 2021. I had a tenant sign a lease mid December 2021 for a move in date on Jan 1st 2022. That's when their lease actually began. I collected their security deposit upon completing their signed lease mid Dec. How does this work with fair rental days vs personal use days? Should the fair rental days be zero? Do I even include this rental on my 2021 taxes?

[Michael Plaks]

@Andrew Shippy

For tax purposes, your property has been placed in service In December, possibly even in November. You're entitled, and actually are required, to report it is a rental property on your 2021 taxes and start depreciation. However, depending on your overall situation, it may or may not make a difference on your bottom line.

To your number of days question. We need to look into the purpose of this question on your tax form. The IRS uses it to compare your rental days against your personal use days to see if it triggers special rules for mixed-use property. In that regard, as long as your personal days are zero, which I assume to be the case, then it does not matter for the IRS. And there's no clear guidance as to how we should (or should not) count the days of vacancy. 15 rental / 0 personal is likely to be accurate for you, but I'm not your accountant so I cannot promise this to be the correct answer.

Beware, however, that there's another adversary who looks at these numbers: your lenders. They (improperly, but they didn't ask for my opinion) use these boxes to calculate your property's income ratios for lending purposes. it won't matter for 2021 in your case, as you had zero income anyway, but keep this quirk in mind for the future.