The depreciation when converted to a rental in 2007 is based on the lesser of the adjusted basis or FMV on date placed in service. [separate land value, land is not depreciated]
Then when you sale a primary home converted to a rental you may have to calculate the sale two different ways.
When you have a gain you will fall back to original adjusted cost basis .
The sale of a home conversion will need to calculated two ways and recaptured depreciation is considered in all cases. Both cost basis is used in the calculation and then you get an and/or factor.
Basis of Property Changed to Rental Use
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Unfortunately this is a not a simple ask and reply situation ,basically it depends and then the clincher a " and /or."
