As you make improvements to the property while it is not rented you just need to keep track of them. When you do decide to start renting the property the amount that you paid for it will be your depreciable "basis". And you will add all of the improvements that you made to the amount that you originally paid for the property and that is the amount that you will depreciate.
Switching back and forth between being a vacation home and a rental isn't a red flag so much. It's just a nightmare for record keeping when you have to keep restarting and stopping expenses and depreciation.
The only deductions that you lose out on are the small expense that are associated with running the property. You can deduct those on a rental and you can't deduct them on a vacation home. And they are only deductible in the year they happen so once they're gone they're gone.
@1housewizard
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