Start working through the rental property. About 2-3 screens in you'll have a selection for "I converted this property from a rental to personal use in 2021". Select that, then continue on.
On the screen "Was this property rented all year?" select NO. Under no circumstances and with no exceptions, do "NOT" select the option to indicate that you did not rent or attempt to rent the property. If you select that option, then the SCH E and all of your depreciation history will be "permanently" deleted.
Days rented must be at least 1 day. Days of personal use will be ZERO. Since you did not live in the property "BEFORE" you converted it to personal use, you have ZERO personal use days. Read the "note" on that screen.
Then finish working through this section entirely.
Next, work through the rental income section. Even if you did not receive any rental income, you have to enter a digit here; even if that digit is zero. Otherwise, the program will fail final checks and tell you that your rental stuff "needs review".
For rental expenses, enter only those expenses incurred while the property was still a rental. Expenses incurred after you converted the property to a rental are just flat out not deductible as a rental expenses.
Then you come to the Assets/Depreciation section. In this section you must work through each individual asset listed there, one at a time by clicking the EDIT button next to each listed item.
On the screen "Did you stop using this asset in 2021?" click YES.
On the next screen where it asks for date of sale or disposition, enter the date of conversion. This would be the day after the last renter moved out, or the date you stopped advertising the property for rent after that last renter moved out, or the date you began moving in. (This date should be the same for all listed assets in the assets/depreciation section.
On the "Special Handling Required?" screen, click YES. If you click NO, then you will be "forced" to enter sales information. Since you did not sell the property you must click YES.
Once you finish the above in the Assets/Depreciation section for all assets listed there, next will be the Vehicle Expenses section. You only need to work this section through if you ever at any time in any year claimed vehicle expenses for this rental. You'll work that through and show your disposition of the vehicle as "removed for personal use".
Basically, that does it.
Once you have finished your tax return in it's entirety, e-filed it and it's been accepted by the IRS, you will need to print out (or save as a PDF) everything.... and I mean "EVERYTHING". There is information about this rental property that you will "need" at some time in the future when one of three things happens in your life.
1. You convert the property back to a rental
2. You sell or otherwise dispose of the property in some other way.
3. You die.
Basically, when one of the above happens, at a minimum you'll need the two form 4562's that print in landscape format for that property, as well as the form 8582 that shows any passive loss limitations and carryovers. Depending on your specific situation there could be other forms that would be required too. So you will basically need to print out a complete copy of everything that includes all the calculation forms and worksheets, and keep it in a safe place since you will need it at some time in the future.
