Deductions & credits

1.  You give him your current adjusted basis when you give him the property, taking into account original cost, improvements, and depreciation.  Do him a favor and give him good documentation of this!

2. Correct, you also give him your holding period.

3. He would only have to pay the recapture when he sells the home, not when he moves in.  For the homestead thing you will have to check with your particular state.