Yes, you will pay tax on the depreciation. The $250,000 exclusion does not cover depreciation.
The depreciation will be taxed at your regular tax rate, up to 25%, plus any State taxes. The 'extra' income on your tax return could also affect other things, such as reducing some credits or deductions.
No, it doesn't matter if you sell the home in 2016 or 2017, the tax treatment will be the same.
