When it comes to claiming expenses proportionally each year, I suggest you elect the option to do it manually. If you let the program do it for you, it just can't quite pro-rate everything correctly based on my limited testing with different scenarios. For example, since property insurance is not deductible for personal use time, the program doesn't prorate that in some cases. It fully deducts the amount you enter.
When classified as a vacation rental, manual proration gets complicated because personal use days count against you; including those days of personal use while it was not classified as a vacation rental. If you want an example of this complicated fiasco created by the IRS, take a look at IRS Publication 527 at https://www.irs.gov/pub/irs-pdf/p527.pdf on page 17 in the third column where it gives an "Example" scenario. Note that some of the personal use days are before the property was re-classified to rental. But those days still count against the taxpayer for figuring deductible expenses.
In the tax year you sell the property you're going to pay taxes on the recaptured depreciation no matter what you do. There is a cap on the tax rate for recaptured depreciation though. It will be taxed anywhere from 0% to a maximum of 25%.
For the capital gains, if the property was your primary residence for at least 2 years (731 days) of the last 5 years (1826 days) you owned it, then your gain is excluded from being taxed. Note also that the 731 days do not have to be consecutive. But all 731 days of the property being your primary residence must have occurred within the last 1826 days you owned it, counting backwards from the closing date of the sale.
It gets complicated when you go converting property back and forth between rental and personal use. That's because each time you convert to rental, you have to reduce your cost basis on the property and all other assets by the total amount of depreciation already taken, and start your depreciation anew again. Then for depreciation recapture, it's 100% up to you to keep track of depreciation outside of the program. There's no way the program can, when you're converting back and forth.
It might be easier to just leave the property classified as a rental and just claim/report personal use days for the days you actually live in it or use the property for any other personal use each year. The only issue I see with that, is that it may raise flags for all I know if you're claiming it was your "primary residence" for the days you lived in it while it was classified as a rental. Most likely, if audited the IRS would want some type of proof for your claim of residence.
It's my impression that either way you go, you can do the manual work now, or do it later. But you're gonna do it sooner or later.
