You need to seek professional help. Outside the fact that the residence was a 1031 exchange, matters are much more extremely complicated because you basically closed and disposed of a multi-member LLC entirely, which means you closed the HO of that multi-member LLC. There was no "transfer" per-se. Then in the new home you opened a completely new business (as far as the IRS is concerned) as a disregarded entity/single-member LLC with a HO for the "new" business.
So you "DO" have to deal with disposition of the old HO and you "DO" have to deal with depreciation recapture on that old HO, completely outside of the 1031 exchange. This is "NOT" simple by any stretch of the imagination. But the below information is offered to help you understand how to deal with this under normal circumstances. Your circumstances are "not" normal.
Close Home office, Open New One
- Under Business Expenses, start/update Home Office Expense.
- Select YES, then continue
- Select both requirements, then continue
- Select NO, continue
- Select at least one of the options, continue
- Your home office qualifies. Continue
- Select YES, continue. (It may say “all 12 months, but YES anyway)
- I’m assuming 100%, then continue
- You’re on Home Office Summary screen. Elect to EDIT it.
- Verify the address (shud be old home office), continue
- Select NO, continue
- Select YES, you used it, and NO, you didn’t share it. Continue.
- Select I Own it, continue
- Select YES, continue
- Confirm square footage, continue.
- Select Actual Expenses, continue
- Confirm Mortgage Interest Applies, then click DONE
- Click Continue
- Select NO, all expenses apply to entire home, continue. (If you have HO only expenses, select NO)
- Enter PMI if paid, leave blank if not, and continue.
- Select NO, continue
- Enter RE taxes, continue
- Utility expenses. You have box for both entire home and HO only. Enter as needed, Continue
- Repair expenses. Enter as needed for whole home and HO only, continue.
- Enter property insurance, continue
- Enter other expenses, continue
- Select NO for casualty/theft
- See your summary, then continue
- Home office asset summary. Only the old HO listed here. Edit it.
- Select Your Home, continue
- Review information, continue
- Did you stop using this asset in 2015? YES YES YES YES YES!
- Enter date of disposition. Must be on or before the day you moved out. Then continue
- Percentage of Biz Use screen, continue
- Fed Depr Dedcution screen, just continue
- Disposition of HO, click NO. You are indicating it was NOT a separate structure.
- Did you sell? Click YES.
- Indicate ownership, enter address, continue
- Sales information. Enter it, and just continue working things through until you are returned to the “Your Home Office Asset Summary” screen.
- Now click the Add An Asset button and start working this through to set up the new home office.
