Residential Rental Property Converted to Personal Use

[Tax Prep by Deb]

I have a client coming in tomarrow that has a residential rental property that she recently moved into and is now her personal residence.

I know ATX has a function in the Asset manager to change it to personal use, My question though has to do with recapture of depreciation. Does this happen when it is converted to personal use, or is it when she disposses (sells) the property?

I've never had one of these before, so I'm not quite sure of the timing.

Thanks in advance,

Deb!

[JRS]

I don't know if this is still current, but I had a similar situation in 2005. I used the following from the IRS as the basis for handling the conversion. (I gave the recapture amount to the client for when the house was sold. Still is a client and hasn't sold the house.)

"Upon the conversion to personal use, no gain, loss, or depreciation recapture under section 1245 or section 1250 is recognized. However, the provisions of section 1245 or section 1250 apply to any disposition of the converted property by the taxpayer at a later date."

Read more: http://cfr.vlex.com/vid/1-168-4-changes-use-19700700#ixzz1DDKlAUWe

[joanmcq]

Its still current. No gain, loss, or recapture until the house is sold.