Converting business property to rental property

Forum|Forum|2 years ago
March 13, 2024
2 replies
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I closed my restaurant last year and started leasing the building and equipment this year. How to I account for the conversion of the building and equipment from business property to rental property? Some of the equipment is fully depreciated and some is not.

Not A Product Question

Mike9241

what type of entity owned the building and equipment when it was a restaurant - a single member LLC/sole proprietorship (schedule C), S-corp, C-corp, or partnership?

chilibean42Author

S-Corp

RobertB4444

If you were the sole member of the S-corp I would just transfer all of the assets over to schedule E and lease them as rental property there. The depreciable basis carries over so all of the items that were fully depreciated still are and anything that is not only has the basis left that it had when you closed the corporation. Then you are just running a schedule E short term rental of your property and equipment.

@chilibean42

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JotikaT2

Can you clarify your question a bit more so we can assist? You're posting on a specific thread and in order to provide an accurate reply, we would need to know what type of business you are converting to. Was the restaurant originally reported as a Schedule C activity to report the income and expenses from operating the restaurant? And what are you trying to do? Is the restaurant no longer there and being changed to a rental property or are you renting the restaurant property out and no longer operating a restaurant?

@AHarrisAccounting

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