Converting a vacation home to a rental property

Forum|Forum|5 years ago
March 28, 2021
3 replies
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I purchased a rental property 2 years ago and have now converted it to vacation home. I use it myself for about a third of the time and rent it the remainder. Am I required to recapture the deprecation I recognized while it was solely a rental property? If so, how do I do that.

Anonymous_

Employee

@Brandweins wrote:

Am I required to recapture the deprecation I recognized while it was solely a rental property?

No. There will be no recapture of depreciation until you dispose of the property to an unrelated third party in a fully taxable transaction.

ColeenD3

Not yet. You will do that at the time of sale. Keep all your information regarding the depreciation you have taken for the future.

raven tang

Hello,

I have similar situation this year. but I applied bonus depreciation on my airbnb before. How do I adjust the depreciation table when I converting the short term rental to a long term in turbotax?

thanks

PatriciaV

Employee

No depreciation adjustment is needed if you now rent a prior short-term rental all year. Work through the property information and change your answers according to the current situation. Your business use percentage will in most cases now be 100%, which TurboTax will use to calculate depreciation on the remaining basis.

Note that bonus depreciation was claimed as a rental expense in a prior year. While your property basis was reduced by this election, you won't need the information until and unless you sell the property. Keep good records.

@raven tang

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Carl11_2

Employee

You don't recapture it yet. But you "may" need to "account" for it now. I assume as a rental property you were reporting the rental income/expenses on SCH E.

So are you no longer reporting the same property as a short term rental on SCH E? (You meet the qualifications to report as a SCH C business maybe?) Or are you entering it as a completely new endeavor on SCH E?