Convert a rental property into personal use for a few years..

[not_no_cpa]

Hi, I have searched quite a bit and think I might know the answer but want to be certain:

For the last several years we have rented out a portion (basement apartment) of our primary residence.  TurboTax rental property section has been used for the tax calculations.  Based on TT forum advice back when we started, I set this up as a separate property (asset) and since then, have tracked the depreciation taken for the apartment "asset" and tracked the cost basis in the apartment (asset) and the remainder of the residence separately in a spreadsheet (as well as within Turbotax).

In 2025 we rented the property for only the first 3 months and took it off the market.  We may rent it out again at some future time (maybe in few years from now), but for example it won't rent out for all of 2026.  So, do I:

A) tell TT that we converted the property from rental to personal use in 2025;

B) answer NO to the above question, and enter 90 days rented and 0 days personal; or

C) answer NO to the above question, and enter 90 days rented and 275 days personal?

(or are there more options than these three?)

I have run scenarios in duplicated returns (using TT Desktop), and the practical effect on our tax is zero for 2025.  It appears in all scenarios the depreciation is reduced so that there is no gain or loss shown for the rental section.  But it seems like option A would be the most accurate.  From reading other threads, my understanding is that if we rented again in the future then at that time we would calculate a fresh basis in a new "rental asset" in TT (and as part of that calculation recapture the depreciation already taken?). 

If I answer NO to the conversion question, though, then each year it's not rented I would be entering zeroes for income and expenses in TT but TT would still be calculating a depreciation expense which would not be allowed?  That doesn't seem right, somehow.

Thanks in advance for any help. 

[AmyC]

1. None of the above / option A with extras - You rented it out for 90 days and have income to report and you converted it to personal use to stop the depreciation on the conversion date. You will enter the 90days of rental. Personal use is zero for the time it was a rental. You will enter the conversion date.

2. When you decide to rent again,  it will be a new asset but you pick up with the adjusted basis. The cost plus improvements minus depreciation allowed or allowable.

[not_no_cpa]

Thanks, @AmyC !!

In my test versions, I didn't see a query where it asked me the conversion date, but I will work through the section again and hopefully all will become clear.  I do understand that I need to report income for the 90 days of rental and that there are zero personal use days during that 90 days.

Best,

[AmyC]

You have to go into the property profile. Go through until you see Do Any of these Situations Apply to this Property?

Check the box I converted this property to personal use in 2025.

[not_no_cpa]

Great, thanks.  I think I have it figured out!