If you did not use the apartment as a rental in 2021 then you can delete Schedule E from your tax return.
Bad move. If one doesn't have access to the 2020 return, then they have no way of knowing how much depreciation has accumulated, or how much passive activity carry over losses they have.
You should work through the rental and indicate that you converted it to personal use. You can use a conversion date of 1/1/2021 if it was never rented at all in 2021. To do this completely and correctly:
- Elect the Edit the rental property, and about three screens in select the option to indicate you converted it from a rental, to personal use in 2021. Then continue working through the program "as if" nothing changed. Enter ZERO for rental income, and you can skip the rental expenses section entirely, provided it doesn't show "needs review".
Then in the assets/depreciation section you must elect to edit each individual asset one at a time and work each one through. When asked "did you stop using this asset in 2021?" click YES. When asked "Special Handling Required?" Click YES. (If you click NO, you will be forced to enter sales information. You did not sell anything.)
If you have any vehicle expenses that you claimed at any time while you owned this rental, then you must work through the vehicle expenses section to remove the vehicle. Most likely, you'll just indicate it was removed for personal use.
This will take care of everything for that property, and you won't lose any of the depreciation history or PAL carry over information.
Once you have completed your return in it's entirety you will need to save "everything" in PDF format. In that PDF format you're looking for 3 forms related to that specific rental property.
- Form 4562 titled "Depreciation and Amortization Report". This form prints in landscape format. The rental property that form applies to is identified in the upper left corner of that form.
- Form 4562 titled "Alternative Minimum Tax Depreciation Report". This form also prints in landscape format. The rental property that form applies to is identified in the upper left corner of that form.
- IRS Form 8582-Passive Activity Loss Limitations. This one prints in portrait format. It contains your carry over losses that you can't claim until the tax year you sell or otherwise dispose of the property. Note that if this form is not present, that just means you don't have any carry over losses.
You will need these forms at some point in the future when one of three things happens in your life.
1) You sell the property
2) You convert the property back to a rental or any other business use.
3) You die.
