Convert AirBnB to Vacation Property

lpiermsre3

I had an airBNB that only got limited use in 2023. However the property was renovated in 2020 and I take depreciation on the renovated property. How does this deduction change (or what are the tax implications) if I change this from a rental property via AirBnb to a non-rental/vacation property that I use for more than 14 days in the year?

PhillipB

Hello, and thanks for joining our community.

You will not see a big effect immediately.

If the property is not rented at all, there will be no additional depreciation in future years and you will not have to report any income or expenses on the property.

If the property is rented, you will still report income and expenses and you will need to track days used for personal use, days rented, and days vacant to report on your return. Your expenses will first be limited to the fraction of days used for rental / total days used, and then the total expenses will be limited to gross rental income.

You will need to continue to maintain records of the properties depreciation. When, and if, you sale the property, you will need to include the depreciation recapture.

Let me know if there is anything else we can help you with.