Your question is academic, if you intend to convert it back to your home. A home sale, in the future, qualifies (under current law) for a $500,000 capital gain exclusion (married filing jointly). You will have to pay tax on the depreciation recapture, for the short rental period, but not on the overall gain.
Q. The major expense must be deprecated and only the deprecated value counts against the home value when the home sells?
A. No! Just the opposite. The undepreciated value counts against the sale price.
Q. Where would I record in my tax return future major expenses (when I'm no longer renting) that would need to be deprecated?
A. You do NOT use your tax return, or even the TurboTax software to record that info. You keep a separate file with that info.
Q. TurboTax would ask for the year/amount of the expense and do a calculation for me.
A. No. When you sell, TT will ask for:
- the sale price
- the cost basis, which you will calculate by adding all the improvements (like the plumbing and electrical) to the the original cost
- the amount of depreciation previously claimed (or shoulda claimed)
All of which you will get from your own records
