@AmeliesUncle wrote:
@DaveF1006 wrote:
No, you will not be able to depreciate it again for the full 27.5 years. You would resume depreciating again over the next 4.5 years.
I disagree. Regulation §1.168(i)-4(c) says that a conversion to personal use is considered as a "disposition" for depreciation purposes (but no gain or loss is to be calculated).
That means when the property is later "placed in service", it is treated as a new property. So you use the current Adjusted Basis and depreciate it over 27.5 years.
@AmeliesUncle is correct and this issue has been raised numerous times in the past on the TurboTax (and Intuit Accountants) boards.
The basis for depreciation when real estate has been used as a rental, converted to personal use, and then converted back to rental use is the lesser of fair market value at the time of the last conversion or the adjusted basis. Obviously, the adjusted basis is most likely to be lower due to the accumulated depreciation deductions taken in prior years.
