Landlord Moving Back to Prior Rental Property

[TonySF]

I had a house as my primary residence until 20 years ago when I moved overseas for work and rented out the house for the duration.  The tenant for over 10 years moved out at the end of January 2020.  There was a lot of fixing up to do as repairs and maintenance had been kept to a minimum, and obviously, the tenants did not take good care of the unit.  At first, I intending to update the unit and rent it out again.  However, by October, after all the restoration, I changed my mind and moved back to the house as my primary residence again (in part, so I can sell it eventually).  I have several questions:

1.  When does that house turn from being a rental unit back to my primary residence - for stopping of depreciation to allocation of property taxes, insurance expenses, etc.?

2.  How much of the restoration of the house to tenantable conditions can be expensed?

Any advice would be appreciated.

[ThomasM125]

The house would stop being a rental house when you made the decision to not rent it anymore.

You can expense repairs that were made up until the time you decided not to rent the house anymore. If you made improvements, however, they would be added to the cost basis of the house as opposed to being expensed as repairs. Improvements are work done that increased the value of the house or extended the useful life of it.

[Carl]

1. When does that house turn from being a rental unit back to my primary residence - for stopping of depreciation to allocation of property taxes, insurance expenses, etc.?

One day after the last tenant moved out, or the date you made the decision to not rent it out - whichever date is last.

2. How much of the restoration of the house to tenantable conditions can be expensed?

Only those expenses incurred up to the date you converted it back to personal use.

For any property improvements made after the last tenant moved out, you will not enter those anywhere on your 2020 tax return. The cost of property improvements will not come into play until one of three things happens in your life.

1) You convert the property back to a rental

2) You sell the property

3) You die.