Moving Property from Flip to Rental
I purchased a property in Dallas well below market value from a wholesaler in October 2016. I fixed it up and put it on the market in February 2017. In the next couple months, I got a couple offers, but they fell through. Out of frustration, (And fear of losing money) I changed the listing to "buy or Rent" in May. Within 24 hours, I had a couple with a baby that wanted to sign a lease for a year and a half for $2250/month! So in June of 2017, I moved the title of the property from my Flip LLC to my Rental LLC, purchased a refrigerator and made a couple of additional improvements. Last, in November/December I did a cash out refinance to pull some cash out of it to fund my next flips.
So I have some questions... how does this work in terms of taxes? When I filed taxes in 2016, this house was on the books as a flip property that had not been sold. Now in 2017 I am using it as a rental. Am I going to run into tax issues? What happens to all the rehab costs from 2016? Can I just say,"remember those rehab costs from 2016? - just kidding, those rehab costs were intended to prepare this property to be a rental". For tax purposes, how do I change this from a flip property to a rental property?