Great. Thank you so much. After a bit more research I believe I've come to the same conclusion as yours. I must file Form 3115 with this year's return and use the catch up value I've calculated with that form to answer TurboTax's question regarding prior years depreciation.
As for handling the switch from renting just a part of the property to the entire property, I think I understand this now too. For the first N years that I rented just F% of my property, with initial full property basis PB, I should compute N years of straight line depreciation using the starting basis F*PB. So that would be ( (F*PB) / 27.5 ) each year, for N years. Then in year N+1 and onwards, the starting basis for the remaining life of the property is PB - ( N * ( (F*PB) / 27.5) ). That is, I reduce the basis by the amount of depreciation I've already taken, and then use the straight line formula for the shortened useful life, which is then (27.5 - N), applied to the adjust full property's basis. I'm pretty sure that's exactly how TurboTax has used the value for "prior year's depreciation" to determine the depreciation deduction amount for this year's return.
One last comment pertaining to depreciation calculations. I believe that the midmonth convention requires that the first "rental use" month is always treated as half a month, so that the 1st year of depreciation must always be reduced accordingly by 1/2 a month's worth.
One last point, I've seen a fair number of comments regarding the nightmarish 8-pages of Form 3115 mishmash which one must navigate when attempting to correct missing deprecation. It strikes me that this is probably a pretty common error/oversight of many casual AirBnB hosts who use TurboTax. In fact, I've come across more than one criticism of TurboTax for failing to include a resounding warning when one includes rental income while also failing to include depreciation.
Are you listing Intuit? How about a warning that once you start using your home to generate significant rental income, then depreciation is not really that optional. And maybe make it as prominent as the recurring upgrade purchase offers?
As for the Form 3115 nightmare, I was somewhat bewildered by the dearth of applicable Google results when attempting to find useful tutorials on using Form 3115 to solve this one specific, and I assume pretty common, problem. I eventually did prevail, and believe I've somewhat descrambled Form 3115, at least for this specific objective, so I will return to this topic, once the tax season tomfoolery is behind us, to share.
THANKS AGAIN!!
