If you choose to report the properties on Form 1065 and then enter each of your K-1's into your personal return, you are correct that you would enter the new basis as the original cost less depreciation taken.
Report the Rental Properties as 'converted to personal use' in the Rental Section (Property Profile and Assets/Depreciation section).
However, if you and your husband are the only members of the LLC, you could be considered a 'disregarded entity' by the IRS and are not required to File Form 1065.
You would still use Schedule E to report your Rental Income and Expenses in that case.
Here's more info:
https://ttlc.intuit.com/replies/3599270
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