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Transforming Your Home into a Rental? Essential Tax Advice

Deciding to convert your primary residence into a rental property marks a significant shift in its income tax implications. As a Las Vegas-based accounting expert, I’ve encountered numerous cases across the country where understanding the intricacies of this transition is vital. The adjusted basis for depreciation will be determined as the lower value between the property's fair market value (FMV) or its adjusted basis at the time of conversion. Image 1 While transforming your home for rental purposes, bear in mind that this reclassification might affect your eligibility for the home sale exclusion when eventually selling the property. This pivotal detail could significantly impact your tax outcomes, underlining the importance of strategic tax planning during home-to-rental conversions.

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