How to Model a Property Transitioning Between Personal Use, Rental, and Secondary Home

Hello PRC Community,

I’m trying to model a property in PRC Gold that transitions between different uses over time, but I’m not sure how to handle the inputs properly. Here’s my situation:

Timeline of Use:

1. Primary Residence: Purchased the property in December 1994 and used it as my primary residence until May 2009.
2. Rental Period: Converted it to a rental property in June 2009 and rented it out until December 2024.
   • During this period, I have accumulated passive loss carryovers of ~$50,000 as of 2024.
   • I also have a mix of fully depreciated items (e.g., appliances and improvements like landscaping) and suspended depreciation items (e.g., HVAC and roofing improvements) that need to be tracked.
3. Secondary Home: Transitioned the property to a secondary home in January 2025, which I intend to keep until selling in July 2030.

Details to Capture:

1. Rental Period (2009–2024):

   • Depreciation: Straight-line depreciation (27.5 years) for the building and qualifying improvements.
   • Fully Depreciated Items: Include items like appliances and blinds that were fully depreciated during the rental period.
   • Suspended Depreciation Items: Track items like the HVAC system and roof replacement that were not fully depreciated before the rental period ended.
   • Rental Income and Expenses: Account for income and costs, including property taxes, insurance, repairs, and improvements.
   • Passive Losses: Include carryover passive losses ($53,033 as of 2024) to ensure they are applied correctly at the time of sale.

2. Secondary Home Period (2025–2030):

   • Stop Depreciation: Discontinue depreciation calculations once the property becomes a secondary home in January 2025.
   • Track Value: Continue tracking the property’s value and planned sale details.

3. Sale Considerations:

   • Calculate:
     • Depreciation Recapture Tax for the rental period.
     • Capital Gains Tax, including the allocation between personal use and rental use.
     • Section 121 Exclusion for the personal residence period (if eligible).
     • Colorado State Taxes.
   • Ensure that:
     • Carryover passive losses are applied to offset gains at the time of sale.
     • Suspended depreciation items are handled correctly.

Questions:

1. How can I input the transition dates (e.g., from primary residence to rental and then from rental to secondary home) into PRC Gold?
2. Should I create separate entries for each phase of the property’s use, or is there a way to handle this within a single property entry?
3. How do I account for:
   • Fully depreciated items from the rental period?
   • Suspended depreciation items that were partially depreciated before the property transitioned to a secondary home?
4. How do I ensure the passive loss carryovers are applied to offset gains at the time of sale?
5. Are there specific fields or settings in PRC Gold to stop depreciation for the secondary home period while still tracking its future sale details?

Thank you,

Dan