I converted my primary residence into rental last month . How will I be taxed if I only rented the unit for 4 months this year ?
@Robert Fleming When a personal residence is converted to a rental, its starting point for basis for depreciation is the LOWER of (1) the adjusted basis on the date of conversion, or (2) the property’s fair market value at the time of conversion. This will be the value you use to calculate depreciation for the 4 months it is being used as a rental.
The rental income and expenses will be reported as usual, just only for those 4 months. If you paid interest/property tax/insurance for the year, you can allocate 1/3 of the expense as a rental deduction. You need to allocate between rental and personal use.