Turning rental into primary residence
Hello all,
So I have an option to move into a rental property in a few years and shedding my current primary residence. The investment property is in an LLC and would have a tax basis and earn income for a few years. If I sell my current primary residence, and take the primary residence exclusion, and move into the rental property ( which at that point would not earn any more income ) how would that work from an accounting/ tax perspective? The plan was to just leave it in the LLC ownership but I'm curious as to what happens to the basis / deductions at that point? I do not HAVE to do this, but it is an option I'm exploring and am looking for advice preferably from someone who has done this. I have tried searching the forums but I only really get the opposite scenario of turning a primary residence into a rental.
I guess my overarching question is this: Say the rental property has a very low basis. When the tenant leaves the property it goes under renovation making alot of repairs to the rental. Then instead of renting it moving forward I decide to move in and make it my primary residence. I would live there for at least 5 years before selling the property and taking the primary residence exclusion on the new primary residence ( old rental property . At that point, would the basis be as it was 5 years ago for these purposes? What happens to the old depreciation that was taken during the time of the rental ( IE - is there recapture from the previous years when it was used as a rental upon the sale 5 years out )