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bunch-of-questions
New Member

Rental property vs investment property

I inherit a house with tenant living in it.  so I know the property is consider as rental property since I need to inherit tenant's lease. so for now, it is a rental property.  

is there anyone know, what I need to do to let this property become a pure investment property when lease ends? 

selling a rental property is too much involved,  I just want to do a pure capital gain and not dealing with depreciation tax recapture...

7 Replies
TomYoung
Level 13

Rental property vs investment property

Unless the tenet is only going occupy the house a very brief time after the death of the owner who bequeathed you the house, I'd say you've inherited a rental and are just going to have to deal with it as such.  Once the tenant leaves you take the house out of the rental pool and it becomes an investment house.  You start "your" depreciation using the house's fair market value at the date of death.

I guess, too, you could immediately sell the rental to some other investor, subject to the lease.
bunch-of-questions
New Member

Rental property vs investment property

thanks, it sounds there is no need to keep a certain gap  after the tenant leave to become an investment house. it really depends on what my intention is. that sounds great.
Critter
Level 15

Rental property vs investment property

is there anyone know, what I need to do to let this property become a pure investment property when lease ends?  When the rental ends you will just take it out of service on the tax return in the asset section to stop the depreciation.

selling a rental property is too much involved, I just want to do a pure capital gain and not dealing with depreciation tax recapture...  And like it or not you will have to recapture the depreciation taken no matter if the property is an active rental at the time of sale or not.   If you don't feel comfortable using the TT program then you may consider using a paid preparer for that tax return in the year of sale. 


bunch-of-questions
New Member

Rental property vs investment property

oh, ok, so no matter what kind of property (other than land) , even my primary house, needs deprecation recapture tax, right?
Critter
Level 15

Rental property vs investment property

Depreciation is required for business use assets like rentals, you do not depreciate personal assets like your home.
TaxGuyBill
Level 9

Rental property vs investment property

Yes, there will probably be tax on the depreciation, even if it was rented for a short time (there is an exception if it was rented for one part of ONE calendar year)..

However, that is really NOT complicated at all.  So I would recommend NOT factoring that into your decision to rent the property or not.  Unless you only plan on keeping it a short time or REALLY don't want to be a landlord, having a rental property can be quite nice.  The monthly income can pay for any house expenses, plus hopefully give you some extra cash-flow.
bunch-of-questions
New Member

Rental property vs investment property

ok, let me start another thread to describe what the problem I have. please advise on that if you can
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