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Converting a rental property to personal use in ProSeries

by Intuit Updated 1 year ago

In the current year return:

  1. Open the Schedule E Worksheet.
  2. Enter your final year income and expenses.
  3. Leave the Complete Taxable Disposition checkbox blank. This type of transaction is not a taxable disposition.
  4. Open the Asset Entry Worksheet(s) for the rental home property.
  5. Scroll down to the Dispositions section.
  6. Enter the Date of Disposition which is the date the rental stopped being a rental property.
  7. Don't enter sales information. Even a zero for sales price will cause Form 4797 to calculate.

 In the next year return:

With this type of disposition ProSeries won't know that the Schedule E Worksheet for the rental is no longer needed. We'll need to remove it in the following tax year:

  1. Open the Schedule E Worksheet.
  2. From the Forms menu, select Remove Schedule E Worksheet.
  3. You'll be asked to make sure you wish remove the Schedule E Worksheet. Select Yes.

These steps will help with any non-taxable disposition, such as:

  • Like-kind exchanges.
  • Conversion to personal use.
  • Transfer to a corporation or partnership.
  • Transfer due to divorce (treated as gift-IRC 469(j)(6) & 1041(b).
  • Installment sale where passive activity limitations are triggered in ratio to gain reported.
  • Bankruptcy.
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