Hi. Wondering if I should amend my Schedule E for a rental property that was taken out of service on Sept. 30 2019 and converted to my primary residence. I converted the rental property to primary residence on Oct 6 2019 to present. I entered ZERO for personal use days. The significance is that I want to sell my home at the 2 year mark and wondering how the IRS verifies that personal residence timeline. Thinking I should amend schedule E and enter personal use days of Oct 6-Dec 31 but the IRS language appears to say not to enter personal use days after converting/retiring. Thank you!
You should amend your return to take the property out of service. Otherwise, the program will continue to depreciate the property as a rental even though it is no longer a rental. As for determining the beginning of the two year period, it begins when you make it the property your personal residence. You have to live in the house as your primary residence for any 24 of the 60 months just prior to the sale.
In the rental property section under your Property Profile, indicate that in 2019 you converted the home from a rental to personal use.
On the page, Was This Property Rented for All of 2016?, answer 'No' and enter the number of rental/personal days. Then navigate to the Asset section to dispose of the property. Do this for any other assets you may have been depreciating as well. This will calculate any remaining depreciation up to the conversion and remove the worksheets going forward.
See attachments.
Hi. Thank you for your reply. I don't see any attachments.
I converted the rental property to primary residence on Oct 6 2019
I am assuming you "actually" did this, on your 2019 return. If you did not, then you "need" to amend. Also, understand how this works.
Days of Personal Use - The number of days you lived in the property as your primary residence, 2nd home, or "any other" type of personal pleasure use DURING THE TIME THE PROPERTY WAS CLASSIFIED AS A RENTAL. So if you showed on your 2019 return that you converted the property to personal use on Oct 6, and you did *NOT* live in that property *BEFORE* Oct 6, then your days of personal use is ZERO.
Days Rented - The day count starts on the first day a renter "COULD" have moved in.
The day count ends either one day after the last renter moved out, or the last day you were actively trying to rent the property out.
Carl
Thank you. For 2019, I marked the box that it was converted to principal residence. This occurred on Oct 6, 2019. So it sounds like I leave the ZERO, because I had no personal days WHILE it was a rental. I just feel uneasy because there is no where to enter a date of conversion of Oct 6 in my 2019 return. Just want to make sure I have good record keeping for achieving my 2 years as a primary residence for cap gains exclusion when I go to sell it this October.
I just feel uneasy because there is no where to enter a date of conversion of Oct 6 in my 2019 return
If you entered the date of Oct 6, 2019 as your out of service date, the only possible way to take it out of service, is to convert it. The only difference between "taken out of service date" and "conversion date", is the spelling. Literally!