@jvgsr whereas I do agree with the strict ( and correct ) interpretation as suggested by my colleague @DaveF1006 , it is still really unfair in fact. This is because , even though ,
(a) conversion of home to rental/income does allow you to choose FMV or actual cost ( acquisition cost plus cost of improvements ) as basis -- which ever is lower.
(b) For depreciation you can choose the old 40yr life for foreign residential property ( converted prior to 2018 ) it still leaves you with possibly a large un-recognized & accumulated depreciation burden lowering your adjusted basis ( when you dispose off the asset ) and for which you had zero benefit under US tax laws.
(c) No way to recognize any suspended losses ( if there were any )
I do not have any solution for this issue but do sympathize with your predicament.
Just a commentary .
Is there anything more one of us can do for you ?
