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Investors & landlords
The simplest way to deal with this problem is to treat the rental property as though this were a new business. You should assign a basis to the property that deducts any depreciation already accrued from the Schedule C use. Because deprecation is calculated on a month-to-month basis, the amount of depreciation you count towards Schedule C use is calculated according to the month you stopped using the property for Schedule C.
For example, assume you have a property that you have listed on your schedule C that has a basis (excluding the land) of 100,000. You used it on your Schedule C for 12 months in the past, and this year you converted it to a Schedule E rental property on September 1. Under the 27.5 year straight line depreciation, you would have already taken 20 months of depreciation (including $2424 for 8 months of 2016), or $6061. The property now has a basis of $93,939. When you write your Schedule E, list that basis for the structure value of the rental property. The 27.5 year depreciation schedule begins all over again. Your Schedule E depreciation would be 4 months' worth, or $1139.
More information about rental properties can be found in this TurboTax article.