RENTAL CONVERTED TO PRINCIPAL RESIDENCE CONVERTED BACK TO RENTAL

Forum|Forum|1 year ago
January 6, 2025
2 replies
15 views

What do I use as the depreciable basis ? Cost less previous depreciation ? FMV is greater than cost.

Purchased in 2008. Rented 2008-2012. Moved into as primary residence 2012-2023.

Moved out of primary to move in with family due to age/health issues. Primary residence is again a rental.

ProSeries Professional

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Best answer by IRonMaN

Go with basis which would be cost less previous depreciation.

IRonMaNAnswer

Level 15

Go with basis which would be cost less previous depreciation.

Slava Ukraini!

dkhAuthor

Level 15

I thought so but then started thinking what if there is some crazy rule......

Thank you - appreciate your knowledge.

IRonMaN

Level 15

The worst thing we can do this time of year is to start thinking 😜

Slava Ukraini!

BobKamman

Level 15

Excuse me for thinking, but I would go back to the original cost basis and continue the depreciation that was started in 2008. For example, the basis is $100,000, so in five years the accumulated depreciation would have been $18,000. Why start figuring depreciation now on only $82,000? And prolong the depreciation period beyond 27.5 years? Just keep using $100,000, plus any improvements or adjustments other than depreciation while not rented. What if the property had been setting vacant all those years, rather than being used as a personal residence? Where is the IRS rule that says when you have to reset the clock?

dkhAuthor

Level 15

Interesting thought. I would consider the idea of using $100,00 if it hadn't been a personal residence. I'm more comfortable with starting with the $82,000. Client is 80+ years old. Probably won't see the end of this 27.5yr depreciation.

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