Investors & landlords

Technically, from your explanation, the rental was converted to personal use February 2024. 

The repairs, as well as HOA fees, etc. cannot be expenses since the rental was not active.

Had you advertised it as available for rent, even if it was not occupied, you COULD have continued to treat it as a rental, but from your description, that was not the case.

If it was converted in February, your "Adjusted Basis" would be calculated at that time. Your Adjusted Basis would be your cost, less depreciation plus improvements for the building. Since land does not depreciate, the adjusted basis is normally the original cost of the land. You would use the depreciation taken (or could have been taken) through February 2024. 

In TurboTax, first enter the income and expenses for the rental (through January) 

Next, report that it was converted to personal use. 

Once you account for the rental income and expenses, you need to enter the sale under:

Wages & Income

Less Common Income

Sale of Home (gain or loss)

Continue through the interview

You will be asked about other use (rental) and depreciation. 

The depreciation will be 1250 gain and reported on Schedule D line 19

The capital gain will be reported on Schedule D and carry to the 1040 line 7

The repairs you were required to make in order to close is not considered a closing cost. 

You can think of it like this, Buyer agrees on a 100,000 selling price if you do 5,000 repairs. 

So, the house must only be worth 95,000 without the repairs. 

You make the repairs and get 100,000. You can't deduct the 5,000 repairs because the higher selling price accounted for that 5,000 in repairs. 

If you paid 100,000 for rental property and depreciated 90,000, your adjusted basis would be 10,000.

If you sell for 150,000

90,000 is depreciation recapture (1250 gain) and 50,000 is capital gain 

(The 50,000 gain would need to be allocated between the land and building, but the tax result will be the same) 

IRS Pub 527