Actually the way this is suppose to work is the following.
- Since you rented the house out years ago and taken depreciation (or should have), hopefully you have a record of that deprecation. You will need this for an adjusted cost basis for your new deprecation schedule.
- Now since you have started renting again, the will put this rental on a new 27.5 yr. deprecation schedule.
- When you are asked about the cost basis, be sure to subtract the depreciation from your original cost basis for the home and this becomes the new basis for the new depreciation schedule. This is an adjusted cost basis.
- To keep it simple, I would treat this like a new rental but remember to use the adjusted cost basis as a described above and not the original basis. This will reduce errors that may occur if the information is entered incorrectly.
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