Things to consider: If you take it out of service and convert back to personal, you then cannot do a 1031 exchange, or at least that is what I have read. I also would like clarification on this point if anyone can. I have a house that has been sitting empty and needs remodeled. I haven't gotten around to it. It has been a rental only. I am not using it personally, just waiting for money to do the job. Is there a way to take it out of service so I am not accruing depreciation (I don't need it) without making it personal use? It is just sitting there empty. after I do remodel it, I would like to 1031 out of it, so I don't want to mess that up.
On another note: From what I have read, if you do take a house out of service, you can then capitalize many of your expenses that are no longer deductible. You have to make an election to capitalize those expenses on your return, however, as they will not appear on your return as a deduction. I'm not a CPA, so double check that.
