I sold it this year (01/17/2020). I am following your OPTION 1: Convert Property to Personal Use.
Don't do that. Leave it as rental property. If you convert it to personal use on your 2019 return, then next year when you report the sale on your 2020 return you'll be "going around your elbow to get to your thumb" to report this sale correctly. With only 16 days as a rental in 2020, just leave it classified as a rental and your tax life will be *S*I*G*N*I*F*C*A*N*T*L*Y* easier when you report this sale next year.
When I examine Form 4562 it shows a "current depreciation" of several $100.00. Should it not zero ??????
No, it should not be zero. Depreciation occurs while the property is "classified" as a rental. Weather it's actually rented or not is irrelevant. So even if you convert the property to personal use on Jan 1st of the tax year, you're still going to take at a minimum, 15 days of depreciation based on the mid-month convention use requirement for rental property. But like I said above, since you only have 16 days of ownership for 2020, just leave it classified as a rental.
Take note that I"m trying to prevent you from jumping off a cliff here that you don't even know is there. But if you convert this property to personal use on your 2019 return, you'll risk finding yourself falling down a bottomless pit when you get into your 2020 return next year, kicking yourself in the butt and cussing about "damn! I wish I'd listened to that guy!"
I've been there, done that, got the T-Shirt. You don't want my T-Shirt.
