Question on treatment of interest expense paid in year of sale

[Nathan H.]

Hello BP community, 

I'm wondering if anyone knows how to treat interest expense on an investment property. The scenario is that the interest was accrued in prior years, therefore not deducted, but was paid upon the sale of the property. I have a seller that was highly leveraged with HM loans that accrued a ton of interest that he couldn't pay until he got proceeds from the sale. The sale price was $600,000 ish and the interest he paid to his lenders at closing was about $150,000. During the year of the sale, it was not rented or actively marketed. 

I'm hoping it would be considered an expense on Schedule E, therefore creating a large loss against ordinary income (I believe he qualifies for "real estate professional" status). If deducted in prior years, when accrued, that is where it would have ended up. However, I'm concerned it may be considered a selling expense since he didn't receive any income from the property in that year nor did he attempt to. In that case it would go against the gain (not ideal). Let me know any thoughts. 

Thank you!