How do I indicate conversion of a rental property to primary residence, if I purchased the property, rented it, and converted it in the same year?

[Carl]

@itutuia Get the the rental section and start working through the rental "AS IF" nothing has changed. Enter any/all rental income received during the year. Then enter all rental expenses incurred during the year that were incurred "BEFORE" you converted the property to personal use.
Then, in the Assets/Depreciation section you must work through each individual asset listed, one at a time. You'll have a screen for "I stopped using this asset in 2023". Select YES.  WHen/if prompted, enter the date that is one day after the last renter moved out.
You'll have another screen titled "Special Handling Required?" On this screen you "MUST" select YES. If you do not select YES, then you will be *forced* to enter sales information. You did not sell the property. You're just converting it to personal use.

If you claimed "ANY" vehicle use on this rental property, then you must also show disposition of that vehicle - even if the business use was less than 100%. Just work through the vehicle asset section, indicated you "stopped using this vehicle in 2023", enter a date of one day after the last renter moved out, then press on.Also, if you get the "Special Handling Required?" screen on the vehicle, then same as above, you must select "YES".

Once you have done this for each and every asset listed in the Assets/Depreciation section, finish working through the rental section in it's entirety, and you're done.

[carlRcraw]

"Additionally, since you rented for less than a year, you are not required to take any depreciation on the property, and I highly recommend that you don't."

Hi Carl. I would like a little more information on this, please. I am mixed-use first year filing. I don't intend to rent the property again. Depreciation seems to be overkill for me, but I didn't think I had an option. Can you explain why you "highly recommend that [I] don't"?  Thanks.

[RobertB4444]

Even though it may be 20 years from now before you sell your personal residence the depreciation that was taken on the property when it was a rental is required to be re-captured and taxed at a normal rate.  Since this is your primary residence again all of the gain on the sale of the home will be non-taxable (at least the first half million).  The only thing that you'll have to pay tax on will be the depreciation recapture.  @Carl is trying to save you some money.

@carlRcraw 

[carlRcraw]

Thank you. I quess I'm dense, but Carl said he highly recommended that I NOT depreciate the property on my taxes, therefore I would not have any recapture when I sold the property. It's a vacation house mixed-use property, so I may sell it in five years, maybe longer. Any clarification would be welcome.

[PatriciaV]

Yes, RobertB4444 is agreeing with Carl that you should not depreciate the property. In the long run, you will save money when you sell the rental by not having to repay the depreciation recapture.