@Anonymous_ my contention is why even state the first sentence it is not even needed if the second sentence all but eliminates it.....you can read that 5 different ways. HELD it for rental purposes.....that is past tense so in the past you HELD it for rental purposes now you are selling it and therefore you can write of the rental expenses. The second sentence does not even line up with PUB 527 for depreciation that clearly states that that ends when the property sells.
Retired From Service
You stop depreciating property when you retire
it from service, even if you haven’t fully recovered its cost or other basis.
You retire property from service when you permanently withdraw it
from use in a trade or business or from use in
the production of income because of any of the
following events.
• You sell or exchange the property.
• You convert the property to personal use.
• You abandon the property.
• The property is destroyed.
