Just want to clarify that this was a rent-back agreement
Assuming this was addressed in the sales contract/closing documents, you really don't need to report this on SCH E. Otherwise, you have to keep track of the depreciation for so long as you own the property, and account for it when you sell the property. To much a PITA really.
What I've seen in sales contracts in the past is the words "lease-back", not rent-back. I find it easier and simpler to just reduce your cost basis by the amount of rent received in the lease-back, and be done with it. That way, you have no worries or concerns with tracking and recapturing depreciation years later when you sell the property.
