Tax on SFH converted to Rental

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Tax on SFH converted to Rental

Matt Madalis
Investor · Frederick, MD · Member since 2015 · 42 posts · 17 votes

I bought a SF townhouse in mid-2008 as a primary residence, after living in it for 5 years we converted to a rental in 2013.

Since the fair market value at the time of conversion was less than the purchase price does that have any effect on gains/losses when I eventually sell?

For example, if purchase price was 300K, my fair market value when converted to rental is 260K, if I sell for 280K do I pay tax on the on the gain and does the original purchase price have any bearing on the final price when selling?

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  • Steven Hamilton IIPro Member
    Accountant, Enrolled Agent · Grayslake, IL · Member since 2011 · 5k+ posts · 2k+ votes
    11y

    @Matt Madalis ,

    Yes, it does unfortunately it will be treated as gain when you sell. Unless you lived there two of the last 5 years.

    [email protected]224-381-2660
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  • Matt Madalis
    OP
    Investor · Frederick, MD · Member since 2015 · 42 posts · 17 votes
    11y

    Thanks for the reply.  So if I understand, my original purchase price has no bearing on the sell price once its converted to a rental.  

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