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Lev
Lev, Tax Advisor
Category: Tax
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Experience:  Taxes, Immigration, Labor Relations
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I was unable to sell my condo, so I converted it to rental.

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I was unable to sell my condo, so I converted it to rental. As I had to move out for the conversion, can I deduct the moving expenses?
Hi and welcome to Just Answer!

If you moved due to a change in your job or business location, or because you started a new job or business, you may be able to deduct your reasonable moving expenses but not any expenses for meals. To qualify for the moving expense deduction, you must satisfy two tests. Under the first test, the "distance test", your new workplace must be at least 50 miles farther from your old home than your old job location was from your old home. If you had no previous workplace, your new job location must be at least 50 miles from your old home.

The second test is the "time test". If you are an employee, you must work full-time for at least 39 weeks during the first 12 months immediately following your arrival in the general area of your new job location. If you are self-employed, you must work full time for at least 39 weeks during the first 12 months and for a total of at least 78 weeks during the first 24 months immediately following your arrival in the general area of your new work location. There are exceptions to the time test in case of death, disability and involuntary separation, among other things.

For more information on deductible and nondeductible moving expenses, please refer to Publication 521, Moving Expenses. - www.irs.gov/pub/irs-pdf/p521.pdf

Please feel free if you need any help.

Be sure to ask if any clarification needed.

Customer: replied 4 years ago.

I understand the rules if you move because your job requires it. However, my question related specifically to the case where you move because you have converted your main residence to a rental. Would that maybe aualify as starting a new business?

You may deduct your moving expenses ONLY if you move because ff you moved due to a change in your job or business location - for all other reasons - your moving expenses are not deductible,
If you are moving out just because you converted your main residence to a rental - your personal moving expenses may not be deducted.
If you will start a new business at new location - then the situation will be different - and if tests mentioned above are met - moving expenses could be deducted.
Sorry if you expected a different answer.
Let me know if any clarification needed.
Lev and other Tax Specialists are ready to help you
Customer: replied 4 years ago.

Maybe I made a mistake in relating the moving expenses to the condo conversion. I am self-employed, I file a schedule C for my business, and I moved my work to a new location where I meet the IRS tests of time and distance. The IRS gives an example of an accountant self-employed who moves from Atlanta to New York City and continues working there. In this example, the accountant is allowed to deduct his moving expenses. Am I not actually in the same situation?

Yes - you might be allowed to deduct moving expenses.
For the second "time test" - if you are self-employed, you must work full time for at least 39 weeks during the first 12 months and for a total of at least 78 weeks during the first 24 months immediately following your arrival in the general area of your new work location.
Please feel free if you need any help with these tests.