@Ed. C Technically, you will need to mark this property disposed of on the date you took it off of the rental market. You will need to allocate the mortgage interest and real estate taxes between the period you rented the home and the period you had it taken off the rental market.
- During time rented, deduct on Schedule E.
- During time off rental market, deduct on Schedule A as follows:
>If you do not own a second home that you already deduct: mortgage interest and taxes both deducted same as your primary residence.
>If you do own a second home that you deduct on Schedule A: mortgage interest is deductible as Investment Interest Expense and real estate taxes are deducted same as primary residence.
For 2016, deduct these expenses the same as you did during the period of 2015 where property was not available for rent.
The depreciation changes you listed above are correct. It would stop depreciation on the date you stop listing it as available for rent.
For 2016, you will need to report the sale of this property and include the amounts of your total accumulated depreciation taken through the life of the rental property. You will also be able to deduct the selling expenses you listed above (i.e. realtor commission, closing costs) when computing your gain on the sale.
