You want to sefeguard yourself from committing a fraud - a prison term is NOT worth any amount of money.
You have other legal options available to you - perhaps not as exciting as trying to cheat IRS, but very safe and legal.
Basically, since the the basis of the rental property is the lower of the adjusted basis or fair market value at time of change, there won't be a loss to deduct. Also, he indicates that courts have upheld the limitation of having actually rented the home, not just advertising it for rent. Again, you should consult a tax expert for more information.
If you are considering a short sale, I would be happy to provide you with additional information.
Keller Williams Realty
Dont know what your tax accountant (the right guy) says but sounds like if you have already have moved to your another residence last year some time then you can claim this house as a rental property when you do your taxes for that period of time.
But if you have not and are thinking to convert this to rental before you sell I say, You can only claim it for the period it was actually a rental property. Please talk to tax guy to be exact because there is stuff that we dont know in 3 little lines so may not advise correctly.
Your Question can only properly be answered after understanding your situation. Tax guy will be the best of course but i be happy to brainstorm with you to sort out some stuff, if you like.
Sounds like you will be coming up with cash if you sell this house.. Is there a need to do that? when....or if there are several other options; If I were you I will explore options before I make a decision.
Call me to discuss if and when you feel comfortable.
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Do you have it currently on the market? Are you selling it as a Short Sale or do you have enough equity to allow you to sell without loss to the bank?
If you need help selling as a Short Sale I would be happy to discuss that option with you further.