@Carl wrote:
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.
Of course, the above-quoted "less complicated way" does not take into consideration whether the adjusted basis is higher or lower than the fair market value on the date of conversion to rental use.
The new basis for depreciation would be the lesser of the two figures and the cost of any improvements made would be added to the adjusted basis while accumulated depreciation would be subtracted from the adjusted basis.
