Converting a primary residence to a rental unit

[murrayjj1]

Hello everyone,

Apologies if this has been covered before, but I believe my situation is rather specific and has not been addressed yet. Any advice would be greatly appreciated, since I cannot seem to get the software to recognize my particular case.

Here is the scenario:

I lived in a home for 1 year,  as a primary residence and then converted it to a rental unit for 2 1/2 years, starting1 Jul 2015. I then moved back in and again used it as a primary residence for 5 1/2 years. Finally,  in 2023, I converted it back to a rental unit for the 2nd time, until present.

How do I fill in the rental property questions to capture this correctly? This is what I have currently

* 2023 was the first year I rented the property. NO

* I converted this property from personal to rental in 2023. YES

* Was the property rented for all of 2023. NO

* In 2023, Days rented at fmv: 245

* In 2023, Days used for personal use: 0

* Have you used this item 100% of time for this business since you acquired it: NO

* Date I started using it in this business: 1 Jul 2015

* Percentage of time I used this item for this business after placing it into service in 2023: 100%

Is this all correctly filled out? If so, then where can I claim the prorata amount for property tax/mortgage while the home was a primary residence in 2023?

Thanks you kindly for any advice

James

[MarilynG1]

Change your response to YES for 'Was the property rented all of 2023'.  The means, from the date it was designated as a rental, that no personal use occurred.  Also be sure to indicate that you 'Actively Participated' in the rental activity. 

Since you have entered the date 'Placed into Service' in 2023, when you enter your full year Mortgage Interest/Property Tax as Expenses in the Rental section, TurboTax will prorate the personal portion and put it on Schedule A for you.

Here's more info on How to Enter Rental Income and Expenses.

@murrayjj1 

[AmeliesUncle]

You are correct that the software isn't really set up for this scenario.

To get it to use the correct numbers, pretend this was the first time it was a rental (2023).

The two exceptions to that is:

(1) when it asks you for the Basis, use the lower of (a) ADJUSTED Basis (usually your original purchase price, plus cost of any improvements, MINUS the total depreciation from when it was a rental the first time) or (b) the Fair Market Value when it was converted to a rental in 2023.

(2) When you sell the property.  But I won't go into that now because it doesn't apply to your current situation.

[murrayjj1]

Thanks a million Marilyn, this has helped me clarify things a lot.

James

[murrayjj1]

Thanks for the insight. This makes sense, and helped me with my assumptions

James