What is Property converted from personal to business use?
In short
When personal-use property, such as a home, is converted to business or rental use, its basis for depreciation and for measuring a loss is the lower of its adjusted basis and its fair market value at the date of conversion.
Key takeaways
- For measuring a gain, the regular adjusted basis is used.
- The rule stops a decline in value during personal use from becoming a deductible loss.
- A sale between the two bases gives no gain or loss.
Where it's tested
REG: Property Transactions: Basis & Cost Recovery — study notes, a five-minute revision sheet and practice questions.
Practise: 3 questions
Question 1 of 3 · 0 answered
Under the One Big Beautiful Bill Act, which statement about bonus depreciation is correct for qualifying property acquired after January 19, 2025?