Furnished Units Often Mean Tenant Trouble

QUESTION: About six months ago we bought a 12-unit apartment building. My family lives in two adjoining apartments and some relatives live in three other apartments. We rent the other apartments to tenants. However, we are having difficulty renting several vacant apartments even though our rent is very reasonable. A friend suggests we offer furnished apartments to attract people willing to pay higher rent. What do you think of this idea?

ANSWER: Not much. The type of people who are attracted to furnished apartments usually do not stay very long. If you want stable tenants, I suggest you avoid furnished apartments. Although it is true you can get higher rent for furnished apartments, you also will have more tenant turnover and problems.

No Deduction for Lost Rent Income

Q: It took me almost five months to evict a deadbeat tenant who went to Legal Aid who defended her free, although she had no grounds for not paying her rent. As a result, she got almost five months free rent by living in my apartment building without paying rent. Although I now have a judgment for the unpaid rent, I will never be able to collect. Can I deduct the unpaid rent bad debt as an expense on my income tax returns?

A: No. Since you don’t have any rent payment to report as income, you don’t get any tax deduction for the unpaid rent. For further details, consult your tax adviser.