@st78 Yes you are correct. Your depreciation should be prorated. Use this link for IRS information on rental property: Residential Rental Property
In the rental interview questions you must show the date it was converted then answer the question after that appropriately.
I used TurboTax Online version to recreate your situation. Follow the steps below. Let's add a new rental so that you can start from the beginning. Leave the other one there until you are done. You can always edit and delete later. Start a new entry for rental property.
In the interview section it specifically ask if you converted property from rental to personal use. Be sure to answer this question as it sets up the part year treatment.
How was Property converted? There is a place to choose your answer
When you convert a rental, you divide the expenses between the time you lived in the home and the time it was used as a rental.
From primary residence to rental
From rental to primary residence
Then you will see this:
OK, keep these in mind as we continue:
Only enter expenses for when the property was a rental.
Since your rental became your home, we'll walk you through stopping depreciation on your rental property and rental assets in the Assets section later. Make sure to keep a copy of your depreciation report, you'll need it if you sell the property.
Was the property rented every day? You select No
This pops up and sets the scene for the computation:
First, enter days rented at a fair price. Then, enter any personal use days. Don't include any days when the property was vacant or days you lived in the property (after you converted it from a rental) as personal use.
Fair rented days (Enter days)
Personal use days (Enter Days)
Make sure you follow the prompts at this point.
This should set up the return to accurately compute the part year depreciation.
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