In one case, a married couple wasn’t entitled to deduct a rental-related loss above the amount IRS allowed. During the year in question, the taxpayers rented a basement bedroom in their three-story home to close friend for $300 a month. On Schedule E, they claimed a $30,763 loss on the rental that yielded $3,000 in income. The U.S. Tax Court denied the bulk of the loss because the taxpayers failed to support it. They claimed depreciation, maintenance and legal fees pertaining to entire house. They renovated a basement bathroom after the tenant moved out and claimed the renovation cost. They also included an HOA fee for a different (timeshare) property they owned. (TC Memo 2023-37)
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