Conversion of property

From Wikicpa

Individuals who convert their principal residences into rental units or vice versa, are not considered to have used the unit for personal purposes for any day during the tax year which occurs before or after a qualified rental term for purposes of applying the deduction limitation allocable to the qualified rental term. However, the expenses must be allocated between the term of rental and personal use.

A qualified rental term is a consecutive term of 12 or more months, beginning or ending during the tax year, during which the unit is rented or held for rental at its fair market value. The 12-month rental requirement does not apply if the residence is sold or exchanged before it has been rented or held for rental for the full 12 months

Example: A taxpayer moved out of his principal residence on March 5, 2006, to accept employment in another state. The house was advertised for rent at its fair market value from March 6, 2006, through March 28,2006 and rented from March 29,2006 until July 31, 2006. The use of the house as a principal residence from January 1 through March 5, 2006 is not counted as personal use.