topic Converting from vacation rental to yearly leased rental in Investors & landlords

Converting from vacation rental to yearly leased rental

raven tang — Wed, 26 Feb 2025 18:20:07 GMT

Hi,

I converted an Airbnb to long term last September.

I had previously cost segregated and bonus depreciated the property

How do I update the depreciation schedule for this change in use?

Does useful life of the property needs to be updated from 39 years to 27.5y?

Thanks

Re: Converting from vacation rental to yearly leased rental

MaryK4 — Wed, 26 Feb 2025 18:31:26 GMT

You will enter as a new Schedule E rental property. You will use the basis as the amount that you have for depreciable basis at the end of the short term rental. The new depreciation will be calculated using the 27.5 years.

Re: Converting from vacation rental to yearly leased rental

raven tang — Wed, 26 Feb 2025 20:23:53 GMT

Thank you.

When you said "You will use the basis as the amount" do you mean the current remaining basis from the short term rental and not the basis from the beginning?

Thanks

Re: Converting from vacation rental to yearly leased rental

DaveF1006 — Wed, 26 Feb 2025 20:35:07 GMT

When you enter this as an depreciable asset, you will use the basis from the beginning as the original cost. In the next screen, it will ask you when you began using this for business. This is when the depreciation begins.

Re: Converting from vacation rental to yearly leased rental

AmeliesUncle — Wed, 26 Feb 2025 23:49:15 GMT

For this "change in use", you have two options:

1) Continue to depreciate over 39 years, using the original placed in service date and original Basis.

2) Restart depreciation, over 27.5 years, using the current Adjusted Basis (usually purchase price, plus improvement, minus depreciation).