Converted primary residence to a rental last year. Should I report it as second home or investment property?

Forum|Forum|3 years ago
January 28, 2023
2 replies
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I bought a new home last April and started paying mortgage/property tax from June, but kept staying in my old home until September when I rent it out after moving to the new home. The new home was vacant between April and September.

The situation really confused me in terms of tax and my questions are:

1. Can/Should I report my new home as primary home from April?

2. Can/Should I report my old home as primary residence before April and secondary home after April?

3. As I rent out my old home from October, should I report the time between Oct and Dec as secondary home or investment property?

Thanks in advance!

-Keye

Best answer by Critter-3

1. Can/Should I report my new home as primary home from April? No ... you did not move in yet.

2. Can/Should I report my old home as primary residence before ~~April~~ October and secondary home after ~~April~~ October? This is correct now.

3. As I rent out my old home from October, should I report the time between Oct and Dec as secondary home or investment property? starting in Oct it is a rental reported on a Sch E ... fyi on the Sch E you had 0 personal days once converted to a rental property ... do not use the option to have the program prorate the before rental/after rental common expenses ... do the math yourself. Basically 1/4 of the mort int, RE taxes and Insurance go to the rental along with any direct expenses you may pay like utilities, lawn care, etc.

Critter-3Answer

1. Can/Should I report my new home as primary home from April? No ... you did not move in yet.

2. Can/Should I report my old home as primary residence before ~~April~~ October and secondary home after ~~April~~ October? This is correct now.

Carl11_2

Employee

1. Can/Should I report my new home as primary home from April?

2. Can/Should I report my old home as primary residence before April and secondary home after April?

Basically, the old home was your primary residence until one day before you moved out you moved out.

The new home became your primary residence the day you moved in.

Note there's no overlap here. You can't have two "primary residences" for a single day. So no overlap.

3. As I rent out my old home from October, should I report the time between Oct and Dec as secondary home or investment property?

No. The old home is converted from personal use to residential rental real estate on the first day you make the property "available for rent". It doesn't matter if it takes you 6 months to actually get a renter in it. At the latest, it's classified as "residential rental real estate" on the first day a renter "could" have moved in.

If this is your first time dealing with rental property *or* with dealing with rental proeprty with the TurboTax program, please let me know. I've information to provide so you don't mess things up without realizing it until it's to late. Perfection in that first year is not an option - it's must. A mistake in that first year *will* cost you dearly down the road. Otherwise, if you're well experienced with this, I won't bother you with what you already know.