Depreciation: Rented Out Part of My Home in 2019, Then Stopped Doing So in 2020

[howarz]

I own only one house and it is my primary residence. In 2019, I rented out the second floor of my house and I lived on the first floor. I filed the tax for 2019 by depreciating the second floor of my house accordingly. I stopped renting out the second floor before the end of 2019, and started using my whole house as my primary residence. In 2020, the whole house was my primary residence for the whole year, and it was not available for the rental market either.

Given the above situation, my questions are

1. Does the second floor of my house still considered as a rental property in 2020?

2. Do I need to depreciate the second floor like I did in 2019?

3. If I stop depreciating the second floor for 2020 tax return, and live the whole house as my primary residence for the next 5 years, when decide to sell the whole house in 2026, will IRS still consider the second floor of my house as a rental property and recapture the depreciation from 2020-2026?

[ColeenD3 · Accepted solution]

1. Does the second floor of my house still considered as a rental property in 2020? No, since you converted it back to personal use.

2. Do I need to depreciate the second floor like I did in 2019? No, again it is now personal use.

3.will IRS still consider the second floor of my house as a rental property and recapture the depreciation from 2020-2026? No, but they will consider it a partial rental in 2019 and you will have to recapture any depreciation when you sell the property.

[howarz]

Thank you!