My rental property was a rental through 12/31/2019, I converted it to a second home at the beginning of 2020.
1. Is there a data entry for the date converted? If so what date do I select 12/31/19 (last rental day) or 1/1/20 first day of second home?
2,. How best to enter the conversion to personal use? - (a) in the rental property section enter zero days rented and zero days personal use only, and/or (b) check the "i didnt rent or try to rent this all year" box. Item (b) seems to delete all reference to the property for 2020 return...which is fine except for question 3 below.
3. The property includes an asset that used the special depreciation allowance and it will not have reached its end of life as of the conversion. I know the depreciation impact on the basis/gain will be dealt with at the time I ever dispose of the property, but I have read conflicting info on reporting the special depreciation effect this year. The TT Premier help on converting assets says "...there is no gain to report. However you must report the section 179 recapture this year." Is the reporting the recapture this year referring to the recalculation of the depreciation as MACRS straightline over its life time with the difference between it and the accumulated depreciation for the asset being considered income? If so how does TT calculate this...especially if the rental property info is deleted since I did not rent the property all year (selecting item 1b above)
Thanks for your help.
Is there a data entry for the date converted?
Yes. While I'm sure you are aware of the screen about 3 screens in with the selection for "I converted this property to personal use" and you selected it, you also have to work through each individual asset, one at a time, listed in the asset/depreciation section. For each asset on the screen for "I stopped using this asset in 2020" click YES. I think it's the next screen where you enter the date. Then on the "Special Handling Required?" Screen click YES. (If you click NO, then you are "forced" to enter sales information.)
If so what date do I select 12/31/19 (last rental day) or 1/1/20 first day of second home?
You can't enter a prior year date for this, on your 2020 tax return. So it has to be 1/1/2020 or after. Note that one day isn't going to make one iota of difference here. However, you 'WILL" be filing the SCH E for 2020 with zero rental income, zero rental expenses, and don't bother entering the mortgage interest, property taxes or insurance data on the SCH E for 2020. None of your rental expenses incurred in 2020 (if any) are deductible at all, anyway. (Depreciation may or may not be a different matter, and has nothing to do with rental expenses.)
How best to enter the conversion to personal use?
You ask, in a way that makes me think you have choices on this. You don't. When you enter your conversion date of 1/1/2020 on each asset, you're not asked for days rented, days personal use, or none of that. But you are correct in that you will *NEVER* select the option for "I did not rent or attempt to rent this property in 2020". If you select that, then you're "forced" to delete the SCH E, and you will lose all of your depreciation history and loss carry over history. If you do that, the absolutely only possible way to get it back, is to totally and completely delete your 2020 tax return and start all over from scratch, so you can re-import it from the 2019 tax return.
The property includes an asset that used the special depreciation allowance and it will not have reached its end of life as of the conversion.
That's why it's important to not do anything that will lose your depreciation history. What I'm not clear on, is if you are "IN FACT" showing the conversion of that SDA asset to personal use (just as you should be on all other assets) *AND* selecting YES on the "Special Handling Required?" screen.
Thanks for the response Carl. I had already advanced through the return such that my converted rental info was deleted...and have been learning more since then, as well as seen through your other posts that I did the sale of another rental property wrong (in terms of the individual sales prices for each asset) You are right, I said no to "special handling". I had guessed I was likely looking at starting over. I will get a fresh start and proceed more carefully (and more knowledgeablely). I may have followup questions then. One more question now - will my worksheets/returns from now until I dispose of the property retain the rental info/depreciation such that its available in the future?
I had already advanced through the return such that my converted rental info was deleted.
At this point, you have no choice but to clear the return and start over from scratch. The only time you can import from the prior year tax file, is when you first start the return. That's it.
You did not indicate if you are using the online version of CD version of the program. If using the online version and you've already paid for it, then you can't clear the return and start over at all. You get to re-enter the history the long way - one keystroke at a time. You'll need both 4562's and the 8582 from the 2019 return to do that.
If using the CD version, simply delete the .tax2020 file in the documents/turbotax directory. Then when you fire up the program it's "as if" you're starting for the very first time after installing it.