Conflicting information - Selling rental property that used to be primary home

[Cindy1323]

I've been trying to follow along with other discussions, and I seem to get conflicting info, so I thought it best to start a new thread...

June 2005, we purchased a home in FL for $740,000. It was our only residence until January 2013, when we moved to CA and decided to rent out the FL house. At the time, prices in the area were still recovering from the housing crash of 2008. I figured when doing taxes in TurboTax for 2013 that the FMV of that home when we converted it to a rental was $540,000. 

In 2021, we opted to sell the property when the tenants vacated in July, and the sale closed in August, for $780,000.  

Now, doing 2021 taxes, I am selling the rental property. It asks if the property was used 100% for business. Some say no, since from 2005-2013 it was our primary home, but only after January 2013, it was used 100%. (I calculated it to be 53% use for business if this is the way to figure it.)  Others say yes, it was used 100% for business, since the "business use" started in 2013 and we never made it our primary home again.  Which is it?

Also, I read something that stated there was different handling for a property that was worth much less than originally paid, when it was converted to business use.  

I understand the part about going through the assets and making sure that the sale of the rental plus the assets all add up to $780,000 (or $546,000 which was the approximate price without the land, according to the % shown of home/land on the county taxpayer information.) And I also understand that, due to the way Turbotax calculates everything, all of the assets must show a gain, if the home itself showed a gain, as the software cannot handle some assets sold at a loss and some at a gain. 

I am using the Turbotax online version, since my 2011 iMac can't handle the newer operating systems that are required for the cd or download version. 

Any insight would be hugely appreciated! 

[ColeenD3]

1)Yes, this is correct: Others say yes, it was used 100% for business, since the "business use" started in 2013 and we never made it our primary home again.

2) Your basis is $740,000, which is your purchase price. You will deduct the depreciation to get to your adjusted basis. When you converted the home, you were asked for the lower of the adjusted basis or the FMV on the date of conversion. This was used to determine the amount to depreciate only. It does not come into play in any other way.

[Cindy1323]

Colleen, thank you so much for your reply! That does make sense to me, about using $740,000 as the basis, and the conversion price used just for depreciation.  That's going to be a HUGE difference.