tax implications when turning long term rental into short term

[John Zhang]

If I buy a house and use as long term rental, take bonus depreciation. But after a year use it as airbnb. What will be the tax implications? Since it is no longer used as a long term rental, do I need to pay depreciation recaptur.

[Michael Plaks]

Quote from @John Zhang:

If I buy a house and use as long term rental, take bonus depreciation. But after a year use it as airbnb. What will be the tax implications? Since it is no longer used as a long term rental, do I need to pay depreciation recaptur.

You will not need to recapture depreciation at conversion. However, it is controversial whether you can utilize the so-called STR loophole in the year of conversion. But since you have already taken bonus depreciation while it was an LTR, this may not even be a concern for you.

There're other potential complications such as a different depreciation schedule, treatment of previously suspended losses, and so on. If you consult two different tax professionals, you might receive two different opinions.