Rental to personal use

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  • Unregistered
    #1

    Rental to personal use

    Client had rental property upto Sep 05. Client spent $8,000 fixing it. Then In Oct he started using it for personal use.

    Just wanted to confirm that I should treat this conversion as a "SALE" and recapture depretiation.

    Next, allocate all expenses - mortgage interest etc between personal and rental use.
    Tags: None
    • Matt Sova
      Senior Member
      • Jun 2005
      • 645
      #2
      No sale

      Stop the depreciation in September, do not deduct the 8,000 spent fixing it up for personal use and allocate mtg int and taxes between schedules A & E.

      No recapture of depreciation until the property is actually sold.
      I would put a favorite quote in here, but it would get me banned from the board.

        Comment

        • OldJack
          Banned
          • Dec 2005
          • 1689
          #3
          Originally posted by Matt Sova
          No recapture of depreciation until the property is actually sold.
          No recapture of depreciation if it is owed personally, however if it is owned by a S-corp or C-corp it would be a taxable sale/distribution to the individual. Partnership could be taxable sale or not depending upon if it was purchased by the partnership or contributed to the partnership by the same individual. my 2¢±¼

            Comment

            • Unregistered
              #4
              Originally posted by OldJack
              No recapture of depreciation if it is owed personally, however if it is owned by a S-corp or C-corp it would be a taxable sale/distribution to the individual. Partnership could be taxable sale or not depending upon if it was purchased by the partnership or contributed to the partnership by the same individual. my 2¢±¼
              Thanks

              It is owned personally

                Comment

                • Unregistered
                  #5
                  Sort of disagree...

                  Originally posted by Matt Sova
                  Stop the depreciation in September, do not deduct the 8,000 spent fixing it up for personal use and allocate mtg int and taxes between schedules A & E.

                  No recapture of depreciation until the property is actually sold.

                  Matt, Client spent money because TENANT CAUSED so much damage. Thus expenses were incurred because of rental. Has to replace carpet, buy new stove etc. I think then he shoul dbe allowed to deduct.

                    Comment

                    • Deltax
                      Member
                      • Apr 2006
                      • 44
                      #6
                      Originally posted by Unregistered
                      Matt, Client spent money because TENANT CAUSED so much damage. Thus expenses were incurred because of rental. Has to replace carpet, buy new stove etc. I think then he shoul dbe allowed to deduct.
                      Only if he was going to continue renting
                      Brian

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