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Client converted personal residence to rental from 2011 to 2013. 2011 basis at time of conversion was 375 home 125 land in San Diego. Depreciation for 3 years was 23579. Client moved back into house as primary residence in 2014. In 2018 client moved out and rented house again. How do I re enter this rental property to the 2018 tax return depreciation schedule. Does the basis begin with the value at the time of the 2018 rental date and start over. Do I use the 2011 original basis and prior deprecation.
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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.
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https://www.law.cornell.edu/cfr/text/26/1.168(i)-4#c
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