Yes, you should say it was converted to personal use, however you should also say it was rented until it was converted and put the date you removed the house from service in the asset section. Once you follow the instructions below you should be able to enter your expenses for the part of the year it was a rental. Manually prorate the expenses yourself and indicate it was rented all year except in the asset section. This will allow the proper expenses and depreciation for the part of the year it was 100% rental.
You should enter the personal portion of real estate taxes and mortgage interest yourself under Deductions and Credits for your Schedule A, if you itemize deductions.
When you are in the rental activity for 2024, you must select the 'Assets' section, then in each asset you must go to the screen titled 'Tell Us More About This Rental Asset'.
- Once you reach this screen for each asset, you must select 'This item was sold, retired, stolen, destroyed, disposed of, converted to personal use....'
- Next enter the date you stopped using the asset for rental purposes. And answer 'Yes' you always used this asset 100% of the time for business. (The percentage of use doesn't change until after conversion from rental to personal use.)
- Select 'Yes' for Special Handling due to 'You converted the asset to 100% personal use'.
You may see some depreciation expense which will be the partial year amount. For the period of the year it was available for rent, you may have some expenses which are allowed for that open period.
Keep all of these records because you will need them when and if you sell this home. All depreciation will be recaptured at that time, regardless of how long you hold the property for personal use. The records are necessary until you completely dispose of or sell the property.
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