Can I suspend depreciating a rental property that I choose not to rent one year. What should I do ?

Forum|Forum|6 years ago
June 6, 2019
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I am offering a summer season property for rent. It is fully rented this coming 2019 season however next year 2020 I think I may live there and not rent it at all for one year. How does this situation get treated regarding depreciation etc. ?

TurboTax Home & Biz Windows

MinhT1

If you use your rental home as a second home or vacation home in 2020, then no depreciation is allowable for 2020. Depreciation will start again if and when you rent that home again.

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odnok2001

Thanks MinhT. I have this exact situation. I had a rental property that I lived in for all of 2018. In 2019, the property was rented out all year. Will the depreciation for 2019 be the same as the depreciation for the prior years (2017 and before)?

DianeC958

Yes, since you have using the property again as a rental the depreciation amount will be the same as the prior years.

Depreciation for a rental property is straight line depreciation where the cost of the rental is divided over 27.5 years to give you an amount you can take for depreciation each year.

Depreciation of Business Assets

@odnok2001

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odnok2001

Thank you! Turbo Tax was recalculating depreciation to make up for the year with no depreciation.

I will depreciate this year at the same amount as prior years (before we lived in the rental for a year).

AmeliesUncle

If you took it out of service for a year, then you need to re-start the depreciation using (1) the NEW "placed in service" date and (2) the NEW Adjusted Basis (or Fair Market Value, if lower).

split

Employee

What is the impact of suspending renting and claiming 0 days of rental use and 0 days of personal use?

Does depreciation still occur?

Any concerns?

A previous post spoke of indicating 1 day of rental use. Well, that can't be good...clearly 1 day makes no sense and seems like a red flag

JamesG1

If you intent is to suspend renting but return at a later time, I recommend the procedure outlined by Carl above.

Convert the property to personal use by selecting Yes at the screen Tell us more about this rental asset and the question The item was sold, retired ... converted to personal use..

At the screen Special Handling Required, select Yes because you converted the asset to 100% personal use. A small amount of depreciation may be computed.

Under Rental type and usage, claim 1 day of rental use and 364 days of personal use.

Claim no rental income or rental expense.

This keeps the rental information intact for when you need to convert the rental property back to full rental status.

@split

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split

Employee

I'm concerned about the notion of making it for personal use. What are the ramifications of that.....I believe that this wold then block the use of a 1031 exchange. Since the property is in a different state, I wonder how making it for personal use might come back to haunt me.

I never plan to sell the property. I may in the future rent it out, or exchange it via 1031. My heirs will end up with property or its exchanged successor. So the depreciation is likely a don't care