Transfer primary residence into rental propoerty in LLC

Forum|Forum|3 years ago
March 3, 2023
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We have a two member LLC (my husband and me 50/50) that owns several rental properties. We file a 1065 for our LLC with Turbo Tax Business.

Now we moved from our primary residence into one of the rental properties to be nearer to where we build our new home. How do we transfer our former home into the LLC to be a rental property? At what value will I list it in the asset list for depreciation purposes?
I checked 100% personal use for the rental property we are living in temporarily. Does that take care of all the tax implications for that situation?

TurboTax Business Windows

Mike9241

When a personal residence is converted to rental property, you need to know the basis for depreciation. This is the lower of your adjusted basis in the residence at the date of conversion (purchase price + qualified capital improvements), or the fair market value of the property at the time of conversion. In general, you must depreciate a residential rental property over a 27.5 year period. Depreciation, however, only applies to the income-generating portion of the home and does not apply to land.

the offset to balance the books is capital contributed during the year.

Anonymous

And on the rental we live in we just list 100% personal use as long as we are there and then go back to the regular depreciation?

Carl11_2

Employee

And on the rental we live in we just list 100% personal use as long as we are there and then go back to the regular depreciation?

Assuming you converted the property from rental to personal use, if you convert the property back to a rental, you'll have to figure your new cost basis manually, and depreciation will start over from year 1 for the next 27.5 years. You'll also have to document all the prior depreciation taken before you converted it to personal use, as that depreciation will have to be recaptured when/if you sell the property in the future.