Get your taxes done using TurboTax

Depreciation begins on the date you place the house in service as a rental.

The basis for depreciation is the lesser of your adjusted basis or the fair market value on the date of conversion to rental use.

Note that it is the fair market value of the property, not the assessed value for property tax purposes.

In your example, you would either $105,000 or the fair market value in 2010, whichever is lower (presumably that would be $105,000).