Empty rental property that I sold, need to file Schedule E?

If your home was available for rent but you didn't find renters, then you must file Schedule E. You will deduct property tax, mortgage interest, utilities, condo fees, cleaning fees, advertising, tax preparation fees for the rental, etc. If it was not a rental, then no Schedule E.

It was a rental but the condo voted to ban renting. So I basically put it up for sale and it sat empty from 1/2010 till it sold in 8/2010 . Won't I be able to report the same expenses on Form 4797?

No. However, you will still get the property taxes and may get mortgage interest expense on Schedule A. What was the property's character before

It was a rental property prior to 2010 for five years. Does it make sense to treat it as a rental property in 2010 even though I made no effort to rent it out since I had it for sale?

Looks like it was not a rental for 2010. It couldn't be said to be available for rent because you couldn't possibly rent it out. Therefore no Schedule E. You deduct property tax on Schedule A, mortgage interest if this qualifies as a primary or secondary home on Schedule A. You can no longer deduct condo fees, utilities, cleaning fees.

It was purchased to be a rental. It was rented for five years. When it became impossible to rent it out, OP sold it. When did it even have any characteristic other than a rental?

Seth

I agree with Seth. When rental property becomes vacant and you are still trying to rent it, you can deduct your expenses but you can't take a loss. When rental property becomes vacant because you want to sell it without a renter on the premises, you are still allowed to deduct your expenses but you can't take a loss. Any accumulated loss would be allowed at the time of sale.

Are you talking about this quote in publication 527

Vacant rental property. If you hold property for rental purposes, you may be able to deduct your ordinary and necessary expenses (including depreciation) for managing, conserving, or maintaining the property while the property is vacant. However, you cannot deduct any loss of rental income for the period the property is vacant.

Vacant while listed for sale. If you sell property you held for rental purposes, you can deduct the ordinary and necessary expenses for managing, conserving, or maintaining the property until it is sold.

Works for me.

The full quote is actually this and it makes a significant difference: Vacant while listed for sale. If you sell property you held for rental purposes, you can deduct the ordinary and necessary expenses for managing, conserving, or maintaining the property until it is sold. If the property isn’t held out and available for rent while listed for sale, the expenses aren’t deductible rental expenses.

Quote from 527 has important difference " If the property isn’t held out and available for rent while listed for sale, the expenses aren’t deductible rental expenses." It would be very unusual to have a fair race between selling or renting. Once you have decided to sell and the property is no longer offered for rent, expenses are NOT deductible as rental expense. This is because the asset is no longer a rental. I believe the expenses should be capitalized or deducted as expense of sale if the property is offered for sale without a rental intent.