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Investors & landlords
Yes, you are correct that reporting the two units as separate rental properties is the best option. This simplifies allocating costs and the issue of a change in business use (conversion to personal).
Your best option may be to amend your 2023 return to reflect the separation of the two properties. See: How do I amend my federal tax return for a prior year?
Use the amended 2023 return to prepare your current year 2024 return. TurboTax will handle the conversion of one unit to personal use, including the depreciation calculations.
Note: On the TurboTax screen "Do any of These Situations apply to This Property?" indicate that you "converted the property from rental to personal use" then continue to the asset summary screen and report the date it was taken out of service.
Be sure to keep records for the converted property. You'll need both the adjusted basis and the accumulated depreciation should you sell the property in the future, or if you convert it back to rental use.
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