Can I convert a rental to a second home??

Forum|Forum|7 years ago
June 1, 2019
2 replies
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From June 1997 till January 31, 2016 my wife and I rented out a single family home, which was our primary residence before June 1997, in a suburb of Dallas, Texas. The renters vacated the rental on January 31, 2016 and since February 1, 2016 the home has undergone a renovation, in fact I am still working on it. We want to convert it from a rental to a second home but continue to live in our current primary residence. Can this be done for this tax year (2016). We want to hold it as our second home for at least two years, till Feb 1, 2018, at which time we may want to sell. Would we have any problems with any IRS rules and can Turbo Tax handle this type of situation...........

TurboTax Premier Windows

Best answer by Hal_Al

That will do you no good. There is no tax advantage to selling a 2nd home. Only the sale of your primary home qualifies for a tax exclusion.

The gain on the sale of a 2nd home is taxable, but a loss is not deductible and the depreciation taken while a rental still must be recaptured (taxed).

It's complicated, but TurboTax can handle it. Even so, you may want to consider professional tax help

T

TaxGuyBill

Employee

In the event you wanted to convert the rental into your Principal Residence for two years (and use your other home as a secondary home), there could be some tax advantages by excluding PART of the gain. If that is an option, you may want to do as Hal_Al suggested and go to a tax professional to see if the tax savings would be worth it.

Hal_AlAnswer

Employee

That will do you no good. There is no tax advantage to selling a 2nd home. Only the sale of your primary home qualifies for a tax exclusion.

The gain on the sale of a 2nd home is taxable, but a loss is not deductible and the depreciation taken while a rental still must be recaptured (taxed).

It's complicated, but TurboTax can handle it. Even so, you may want to consider professional tax help

T

TuTU196844

I have a single family residence as an income property out of state. I would like to convert it to a second home, but NOT a principal residence. I have owner it since 2011. Can I use Turbo Tax instructions to accomplish this >

Critter-3

All you need to do is indicate the rental was removed from service and converted to personal use ... follow the interview screens in the rental info and assets sections.