Converting property from rental to residential

Forum|Forum|2 years ago
December 31, 2023
3 replies
0 views

Have been renting a property to my daughter and son-in-law for 10 years. Want to convert the property to residential and have them continue to live there free. How do I set this up in TT? TIA.

TurboTax Home & Biz Windows

Critter-3

As you complete the Sch E interview screens you will indicate the property was converted to personal use and in the asset section you will take all of them out of service ... just follow the screen instructions.

archimedesAuthor

Looking at Sch E and would like to know if it is best to enter all the 365 days as personal use. What entries in the asset section are you talking about? TIA.

TomD8

Employee

@archimedes --

The IRS considers any day you rent to family members below FMV as a day of personal use.

https://www.irs.gov/taxtopics/tc415

**Answers are correct to the best of my ability but do not constitute tax or legal advice.

Mike9241

if you were renting at fair rental be wary that you need to keep track of any depreciation allowed but that will be subject to recapture when you sell despite the fact it is now a personal residence. Turbotax will not do it.

archimedesAuthor

To all the good people who are trying to help me:

To all the people trying to help me,

Using TT Desktop H&B 2023. The problem I seem to be having is that what I am seeing in my TT differs from what folks are telling me I should see.

From the top,

1. Start a new return.

2. Import return data from 2022 TT.

3. Review and confirm imported data from 2022.

4.Next Screen I see is "Let's find some business deductions". Select continue.

5. Next screen select "I'll choose what I work on".

6.Next screen "Rental Real Estate and Royalties". has "Yes" and "No" buttons. Do I leave the "Yes" button checked or do I choose "No"?

7. If I select "No" I eventually get to a screen with a choice to select "I converted this property from rental to personal use in 2023". If I select that any info about the property disappears from TT and I don't know how to proceed from there.

I have never claimed the property as an asset and was never asked by TT if I wanted or needed to. I have never been able to find the "Assets" sections refereed to by the respondents here That's why I'm stuck where I am and cannot see where to go from here. Any help appreciated. TIA.

Carl11_2

Employee

What you describe gets to to the main rental property entry where you have to select the EDIT button to actually "do" anything. Then you have choices:

- Property Profile

- Rental Income

- Expenses

- Assets/Depreciation

- Vehicle Expenses

Select Assets/Depreciation. If you are presented the option to "Go directly to your asset summary", select YES then continue. Otherwise, read the next line below.

If asked if you bought anything less than $2,500, select NO then continue. Otherwise, read the next line below.

If asked if you made improvements in 2023, select NO and continue. Otherwise, read the next line below.

At this point, you "SHOULD" see at an absolute minimum, the property itself listed. If you have more than that, let me know. Is this what you experience? If it's not what you experience, then what "do" you experience? I will also need to know in what tax year you started reporting this property on SCH E. I know you may have mentioned it above. But this thread is so long now, I would rather not have to read through it all for a third time. 🙂