TaxMonkey
Level 8
12-07-2019
04:22 AM
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Conversion to personal property is treated as a disposition with no gain recognition.
When converting again to rental use you will use the lower of FMV or adjusted basis - almost always in this situation it will be the adjusted basis, with a class life of 27.5 yr (residential rental). Make sure to track the previous depreciation as it will be subject to unrecaptured s1250 gain on disposition.