- Will I have to enter this as a new home in Turbotax or should I continue the old rental somehow
You'll enter it as a completely new property.
- For depreciation, @tagteam mentioned before that I will need to re-calculate the fair market value of the home or the adjusted basis and deduct any depreciation I have already claimed when it was a rental before. Does this reset the depreciation period of the home to be the full 27 1/2 years based on this new value
That's a more complicated way of saying what is really simple. Take the cost basis you used when you originally rented the home (or part of it) and subtract the depreciation already taken. That will be your new cost basis. Note that what you enter in the COST box will be that adjusted cost basis. What you enter in the COST OF LAND box will be "exactly" the same as you used before since land is not a depreciable asset. The program (not you) will do the math of subtracting the land value from the cost to arrive at your new cost basis for the structure. Then the program (not you) will depreciate the new structure value accordingly.
Depreciation will start over from year one, for the next 27.5 years.
Finally, note that it is up to "you" to keep track of the prior depreciation taken when it was 2/3 rental. The program has no way of knowing that amount, or of keeping track of it. This will matter in the future when you sell the property, because you are required to recapture and pay taxes on all recaptured depreciation in the tax year you sell the property. I suggest you write this information down and file it will your original purchase papers on the property that you received when you closed on the original purchase of said property. That way, you'll have it handy in the future when needed.
