Was the property rented, or actually available for rent on or before Dec 31 of 2020? This matters.
Also, I'm providing you some guidance below, since this is apparently your first time dealing with rental property on your taxes. Understand that absolute and total perfection in that first year on the tax return is not an option. It's an absolute must! Even the tiniest of mistakes can grow exponentially over the years and when you catch that mistake a few years down the road, the cost of fixing it "will" be high. So if you have questions, ask. The only dumb question is the one you don't ask. It's not like we learn this stuff through osmosis.
Rental Property Dates & Numbers That Matter.
Date of Conversion - If this was your primary residence or 2nd home before, then this date is the day AFTER you moved out, or the date you decided to lease the property – whichever is later.
In Service Date - This is the date a renter "could" have moved in. Usually, this date is the day you put the FOR RENT sign in the front yard.
Number of days Rented - the day count for this starts from the first day a renter was contracted to move in, and/or "could" have moved in. That would be your "in service" date or after if you were asked for that. Vacant periods between renters do not count for actual days rented. Please see IRS Publication927 page 17 at https://www.irs.gov/pub/irs-pdf/p527.pdf#en_US_2020_publink1000219175 Read the “Example” in the third column.
Days of Personal Use - This number will be a big fat ZERO. Read the screen. It's asking for the number of days you lived in the property AFTER you converted it to a rental. I seriously doubt (though it is possible) that you lived in the house (or space, if renting a part of your home) as your primary residence, 2nd home, or any other personal use reasons after you converted it to a rental.
Business Use Percentage. 100%. I'll put that in words so there's no doubt I didn't make a typo here. One Hundred Percent. After you converted this property or space to rental use, it was one hundred percent business use. What you used it for prior to the date of conversion doesn't count.
AVAILABLE FOR RENT
The rental property is not considered to be "in service" as such, until the day it is actually available for rent. For example, if I walk up to you today with cash and pay you the deposit and first month's rent, can I start moving in today? If the answer is yes, then today's date is the date it was placed "in service". But if you tell me no, because you're still doing work in/on the property, then the property is not "in service" until the first day I "could" move in - weather I actually move in on that date or not.
Likewise, if I have the property "move in ready" on today's date, and I start advertising on today's date, yet it's 3 months before I actually get a renter moved in, then "today's date" is still the date it was available for rent, and "today's date" is the in service date.
The in service date is important, because that date is used to determine when depreciation begins.
There's much more info to pass on here. But I don't want to cause "information overload" at this point. The important things is, as you are doing all this stuff, if in doubt, ASK!
