prorating rental expenses?

No, not right. Rentals can generate net losses, which may or may not be currently deductible under passive activity loss rules. Some rentals do have the limitation you describe, however.

Expenses have to be "ordinary and necessary". As for "waiting for another tenant", what steps did you take to find a tenant, especially after the first few months of vacancy? This is a "facts and circumstances" situation where there is no simple formula you can follow. I for one am not interested in the specific details, but rather am asking the question so that you can decide if you can document reasonable efforts to find a tenant, and could present them in an audit with a straight face.

Real property taxes are always deductible on your Schedule A, if nowhere else.

You have not mentioned depreciation expense, which should be deducted to the extent allowable (since you will have to account for it down the road, whether actually deducted or not).

Too much missing information to answer these questions (although I can't think of scenario where you would pro-rate the annual expenses). If this is the first year of rental activity, it is highly recommended to consult with a tax professional. Not only do you want to get the annual rental activity correct, but there are important items regarding how you acquired the property, what its use before and after the rental activity are, and how you intend to ultimately dispose of the property, that you really should get straight sooner rather than later.

Thanks for that.

"Mark Bole" wrote:

I thought as much.

I'm at arm's-length on this, lacking first-hand information. Just trying to help my wife's family, who oversee the rental of my mother-in-law's former residence. (She is now in a "senior community".) Too difficult for me to get details. We certainly will rely on our professional tax preparer (CPA) to do the right thing when filing returns. Just trying to get a leg-up on estimated taxes while he is on vacation. Advantageous to mail the Calif estimate by Dec 31.

But the gross rental income is small enough that it can be ignored for that purpose.

"Mark Bole" wrote:

Klunk! Sometimes I get so focused on one problem, I put blinders on and overlook the bigger picture. Thanks again.

=======No, it's not. Rental income on a residence (or recently converted) can be ignored only if it is for 14 days or less for the entire year (see the "business use of home" topic for details).