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I'm trying to figure out if a piece of real estate that I own should be treated as a rental property or a second home on my US 2016 income taxes.

I bought the home in 2010 and lived in it until 2014 as my primary residence. At that point, I moved out of state for a job and rented out the house for the remainder of 2014 up to Nov 2015.

However, the rental wasn't really working out (major property management/legal issues), so I decided to put it on the market for sale in Nov 2015. It didn't sell until Feb. 2017, so it was vacant the entire year of 2016. I didn't spend any time there, and made no attempts whatsoever to rent it during the year.

Because of that, I'm not sure whether this property is still a 'rental property' that just happened to be vacant, or if it is a second home? Given that I earned $0 of income from the property, is it better to claim it one way vs the other? Can a home go from being a rental the prior year to a second home this tax year?

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    Note: you will still have to account for depreciation during the period the home was a rental while trying to determine capital gains.from the sale of the house.
    – mhoran_psprep
    Feb 28, 2017 at 11:13
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    As for better to claim it one way or the other - it's better to claim it as a second home. As a rental, you could deduct mortgage interest and depreciation. However, since you have no rental income to reduce, those deductions won't save you anything. As a second home, you'd be able to reduce your "regular" income by the mortgage interest deduction.
    – iheanyi
    Feb 28, 2017 at 16:48

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Since it was vacant the entire year of 2016, it qualifies as a second home.

See IRS Pulication 936 search "Second home not rented out" and that will take you to the relevant section. Here it is excerpted:

Second home not rented out. If you have a second home that you do not hold out for rent or resale to others at any time during the year, you can treat it as a qualified home. You do not have to use the home during the year.

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