How do I stop depreciation correctly in TurboTax?

[slara22]

I converted my home into a rental unit between August 2021 and June 2022, while I lived abroad. Upon my return, I converted it back into my home. I took depreciation for my rental in 2021 and I now need to stop it for my 2022 taxes. The problem: when I enter the date of when I stopped using my home as a rental in TurboTax, it gives me a crazy depreciation amount that results in a significant loss in rental income (instead of any gain). This just doesn't seem right. How do I stop depreciation correctly?

At the same time - I also have a home office and usually take a depreciation deduction for it.  I stopped taking the deduction while abroad, and plan to re-start this for the months I've lived here in 2022. How should I enter the stopping and resuming home office depreciation in TT, in a way that TT knows that I have taken such depreciation before? Thank you in advance for your help.

[Anonymous_ · Accepted solution]

Did you convert the rental property to personal use in the program? That should stop depreciation at the mid-month point.

If your expenses (including the part-year depreciation) exceed your rental income, then you could be seeing a loss as a result of the special allowance for active participation.

See https://www.irs.gov/publications/p527#en_US_2020_publink1000219124

[slara22]

Hi @Anonymous_ 

Thank you for your response. Yes, I did convert the property to personal use in the program and I checked the box where it asks about special circumstances (e.g., converted to personal use). My rental expenses do not exceed my rental income. 

After all expenses,  I am left with approx. 10,000 rental income. When I try to stop depreciating in the program, it allows about 6,500 for depreciation and I am left with an income of approx. 3,500. Is the program correct when it does this? Doesn't make sense to me.....

Any light on this matter will be very appreciated!
Thanks again!

[Anonymous_]

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@slara22 wrote:

it allows about 6,500 for depreciation and I am left with an income of approx. 3,500. Is the program correct when it does this?

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Yes, it appears correct since you are getting a depreciation deduction for that part of the year during which the property was used for rental purposes (January through June of 2022).

[slara22]

Thank you very much @Anonymous_ !