Yes, you are correct that once the property becomes personal use property, you would not be able to use it in a 1031 exchange. Changing this to personal property should not be a factor if it is in a different state but sometimes, state tax codes could vary from state to state.
If you decide to sell the property, the deprecation that you previously deducted needs to be recaptured thus the basis of your home is reduced by the amount of depreciation taken while being rented. However once your heirs inherited the house, and if they decide to sell, they are not required to report depreciation recapture.
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