Investors & landlords

Begin working through the rental property in the Rental & Royalty Income (SCH E) section of the program and elect to EDIT the property.

Now elect to edit/update the property profile.

Work through the property profile screens and one of them will have a selection on it for "I converted this property from a rental to personal use in 2018." Select that option and continue working through the property profile section.

On the screen, 'Was this property rented for all of 2018?" you will select NO. The number of days rented will be the number of days from Jan 1st 2018 up to the date of conversion. This date is "generally" the day after the last renter actually moved out.

The number of days of personal use will be "ZERO". It's asking for the number of days of personal use *WHILE* *THE* *PROPERTY* *WAS* *CLASIFIED* *AS* *A* *RENTAL*. So the days you may have lived in it ***AFTER*** you converted the property do personsl use ***DO*** ***NOT*** ***COUNT*** for anything.

Finish working through the property profile section.

Now elect to update Rental Income and report all rental income you received.

Next, elect to update Rental Expenses and pay attention to detail. You can only claim those expenses you incurred while the property was classified as a rental. If you paid the property insurance *BEFORE* you converted it to a rental, then you will have to manually do the math yourself to prorate the amount of the insurance you paid, that you can actually claim on the SCH E.

For example, if the insurance was due Apr 1st and you paid it on or before that date, and you converted the property to personal use on July 1st, then you can deduct six months of insurance, and that's it. If you paid $1200 on Apr 1st for a year's insurance, that's $100/month. So for six months you would enter $600 in the expense section where it asks you for insurance.

Then on the next screen whre it asks for Real Estate Taxes, you will enter the "ENTIRE AMOUNT" of real estate taxes you paid for the "ENTIRE YEAR". The program will automatically do the pro-ration for you and will split the property taxes paid between the SCH E for the period of time it was classified as a rental, and SCH A for the period of time it was classified for personal use.

For the mortgage interest paid, you will enter the *ENTIRE AMOUNT* of mortgage interest you paid for the *ENTIRE YEAR*. The program will automatically do the pro-ration for you and will split the mortgage interest paid between the SCH E for the period of time it was classified as a rental, and SCH A for the period of time it was classified for personal use.

THen finish working through the Rental Expenses section.

Next, elect to update the Assets/Depreciation section and selec the option to go straight to your asset summary.

At an absolute minimum you will have the property itself listed there. You "may" have other assets too. But it's a fact that at an absolute minimum you will have "at least" one entry there and it will be the property itself.  Elect to EDIT that property and start working it through. The first screen is titled "review information". Do not change anything what-so-ever on this screen and continue.

The next screen asks, "Did you stop using this asset in 2018?". Select the YES button.

For the "date of sale or disposition" the date you enter here must be at least one day after the last renter moved out. Enter that date and continue.

On the "Special Handling Required?" screen, click YES. If you click no, then you will "have" to enter a sales price. You did not sell this property, so click the YES button.

The screen now shows the depreciation for 2018, up to the date you reclassified the property from rental property to personal use. Just click continue and you're returned to the "Your property assets" screen.

Now if you have other assets listed, you *MUST* do this for every single one of those assets. Make sure your disposition/conversion date is the same for all assets.

Once you have worked through all assets to show them as removed for personal use, you can click the DONE button at the bottom of the "Your property assets" screen.

Now if you claimed "ANY" vehicle use for this rental for "any" period of time you owned it, then you must also work through the vehicle expenses section to show your disposition of this vehicular asset from the business; even if the vehicular use claimed was less than 100% business use.

When done with all this you can click the "DONE WITH RENTAL PROPERTY" button and that basically does it. From here you can continue on with the remainder of your tax return.

Once you have completed your tax return in it's entirety, it is *IMPORTANT* that you print a hard copy of the "ENTIRE" return on paper. You need to print absolutely everything. Not just the "forms required for filing" and not just fhe "forms to keep for your records". You need to print absolutely everything, which will include all forms and calculation worksheets.

You will need this information (particularly the data on the two IRS Form 4562's that will be printed for this property) in your future when any one of three things happens in your life.

A) you convert the property back to a rental

B) you sell or otherwise dispose of the property so that you no longer own it.

C) You die.

So keep that entire printout of your 2018 tax return in a safe place, and keep it *forever*, or at least until one of the aforementioned three things listed above have occurred.