Rental Property conversion multiple times since 2011

Forum|Forum|6 years ago
December 7, 2019
1 reply
19 views

Client converted personal residence to rental from 2011 to 2013. 2011 basis at time of conversion was 375 home 125 land in San Diego. Depreciation for 3 years was 23579. Client moved back into house as primary residence in 2014. In 2018 client moved out and rented house again. How do I re enter this rental property to the 2018 tax return depreciation schedule. Does the basis begin with the value at the time of the 2018 rental date and start over. Do I use the 2011 original basis and prior deprecation.

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Best answer by TaxMonkey

Conversion to personal property is treated as a disposition with no gain recognition.

When converting again to rental use you will use the lower of FMV or adjusted basis - almost always in this situation it will be the adjusted basis, with a class life of 27.5 yr (residential rental). Make sure to track the previous depreciation as it will be subject to unrecaptured s1250 gain on disposition.

T

TaxMonkeyAnswer

Level 7

Conversion to personal property is treated as a disposition with no gain recognition.

When converting again to rental use you will use the lower of FMV or adjusted basis - almost always in this situation it will be the adjusted basis, with a class life of 27.5 yr (residential rental). Make sure to track the previous depreciation as it will be subject to unrecaptured s1250 gain on disposition.

C

CrisgpsAuthor

Level 2

Thank you for responding! When converting again in 2018, what determines the new adjusted basis? This house is in San Diego and originally purchased over 10 years ago. The values have sky rocketed.

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