I have no idea how TurboTax would actually handle this scenario, but when you convert to 100% rental (business) use, then you would use the adjusted basis of the property for depreciation purposes (or the FMV if that is lower than the adjusted basis).
Again, I believe TurboTax is calculating this correctly as you would not use a new recovery period, but the deduction would increase as a result of the increased business usage.
