While converting a rental property to a residential property is as simple as just moving in, the financial implications are much more significant. Converting it from a rental to a residence removes your ability to deduct expenses from the property from your taxes. It also changes how it will be treated when you sell it. While you may gain the ability to take advantage of the personal residence capital gains shelter, converting it won't eliminate your depreciation recapture tax liability.

A property becomes residential property once you start living in it for more than two weeks a year or more than 10 percent of the days for which it would be available to rent.