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Investors & landlords
Your best option is to continue to handle these as two separate rental properties. This is consistent with the historical treatment and has benefits that outweigh the additional accounting work.
The business use of one property has changed over the years. Even though you have calculated the effective percentage and may have calculated the total depreciation claimed for the rental use, you'll be in a better position to determine the adjusted basis for the property when you sell it. The same is true for Property B, even though it has been primarily a rental unit since first placed into service. Again, calculating adjusted basis separately for this property will be much easier if it's not combined with the other property.
Other considerations include passive losses that may not be the same for both properties and depreciation recapture (if any) when sold. It's possible you may sell one unit and not the other. These are all good reasons to continue reporting the rental activity as you have been.
Also, income is likely different for each property and certain expenses may apply to one property and not the other. The management company is probably tracking these as separate rental units for the same reasons.
Finally, if you're not in the business of renting properties or buying & selling rentals, you should continue to report this activity on Schedule E. TurboTax asks some questions at the beginning of the Rental Activity section to help you determine if you are a "real estate" professional for tax purposes. Your answers may make the situation clearer for you.
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