You are correct that depreciation stops when you retire your rental property. According to IRS Pub 946: Retired From Service:
"You stop depreciating property when you retire it from service, even if you haven’t fully recovered its cost or other basis. You retire property from service when you permanently withdraw it from use in a trade or business or from use in the production of income because of any of the following events.
- You sell or exchange the property.
- You convert the property to personal use.
- You abandon the property.
- The property is destroyed."
Notice the list doesn't include "stop renting" the property. Although you would report rental days through the end of the lease, the assets were taken out of service on the date they were sold. For this reason, depreciation is calculated through the sale date.
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