converted rental unit to personal use in 2024 but failed to note it on tax form

[nytramleahcim]

I converted a rental unit to personal use in September 2024.  When I did my 2024 taxes, I failed to say it was converted.  Should I amend my 2024 taxes to show this, and  then prepare my 2025 taxes?

[ThomasM125]

You should do an amendment on your 2024 return to show the conversion of the property to personal use. If your tax does not change, however, you don't need to file the amended return. This is assuming you don't have a rental loss carryover that would be affected or special depreciation that is needed to be recaptured.

For 2025, you can go into the rental section and indicate that the property was disposed of. You will see an option for that on the screen that says Do any of these situations apply to this property? On another screen you will see Was this property rented for all of 2025? You should choose the option that says no, this property was not rented for all of 2025. Then you need to enter -0- for the days the property was rented and 365 for the days of personal use. That will result in the property being removed from your program.

You should document the accumulated depreciation of the house during the rental period as you will need that if you sell the house in the future, as it may be taxable.

[nytramleahcim]

Thank you for the quick response.  I created the amended 2024 form, and it didn't show any difference, so I won't submit it.   On my 2025 form, I deleted the rental property by clicking the "delete" button on the Rental and Royalty Summary page.  Hopefully that was the right way to do it.

[DaveF1006]

Since your 2024 tax liability didn't change, you're technically fine not filing the amendment. However, make absolutely sure you have a PDF copy of your 2024 Depreciation Report (often called the "Depreciation and Amortization Report"). 

If you ever sell this home, your "basis" (the amount you don't pay taxes on) will be your original purchase price minus all that accumulated depreciation. If you don't have that number handy, you might end up overpaying the IRS later.