Question

converting rental property to residence

Forum|Forum|1 year ago
September 4, 2024
2 replies
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My question are two questions, the first I had a rental property for 10 years that I had converted into a residence. 2023 the renters moved out in May and I started renovations that took a year to complete. During the renovations I did not live in the house until everything was completed. How will this effect my taxes? Does having the house vacant during the renovations effect my taxes on either houses?

The second question is during this time I lived in my primary residence and lived there for over 20 years. I lived at this residence until I was able to move into my new residence in June 2024. Does the prop 121 rule still apply when I moved from one primary residence to the other in June 2024? And can I now rent my old primary residence for 2 years to keep it under the prop 121 rule? Primary for 2 years out of 5 years and then sell it?

M-MTax

Idle Property

Continue to claim a deduction for depreciation on property used in your rental activity even if it is temporarily idle (not in use). For example, if you must make repairs after a tenant moves out, you still depreciate the rental property during the time it isn’t available for rent.

M-MTax

If you rent out the old residence and then sell it while it's in rental use, you're fine. You can still claim the 121 exclusion if you're eligible....ownership and use tests for 2 out of 5. Don't move back into it after you've been renting it or you'll have nonqualified use when you sell.