@Carl wrote:
You should work through the rental and indicate that you converted it to personal use. You can use a conversion date of 1/1/2021 if it was never rented at all in 2021.
You actually cannot use a conversion date of 1/1/2021. If you do, TurboTax will calculate depreciation through 1/15/2021 since it is programmed to use the mid-month convention.
Basically, @DoninGA is correct; the rental was taken out of service (as a rental) for the entire 2021 tax year and, as a result, a Schedule E should not be filed.
The taxpayer should retain all records relating to depreciation and passive losses (TurboTax should retain the reports and Form 8582). If the property is placed in service in a subsequent tax year, then depreciation will start over (27.5 years) with a new basis.
