Can I use the Fair Market Value at the time I converted a primary residence to a rental to calculate capital gains taxes owed?

[lpennock]

15 years ago I purchased a home for $200k that served as my primary residence for 10 years, during which time it appreciated approximately $200k.    It was converted to a rental 5 years ago, has appreciated another $100k in that time, and I have not lived in it for any 2 of the previous 5 years.     Must I use the original purchase price as the cost basis to calculate capital gains on the sale of this rental property, expected to sell for about $500k, or may I use the FMV at the time it was converted into a rental, thus reducing the gains by $200k during which it was my primary residence?  (note, for simplicity I am using round numbers that closely reflect my situation).

[Leonard · Accepted solution]

When a personal residence is converted to rental property, you need to know the basis for depreciation purposes. This is the lower of your adjusted basis in the residence at the date of conversion (purchase price plus qualified capital improvements) or the fair market value of the property at the time of conversion.

[lpennock]

Thank you, I think I understand.    Separately, I will also owe depreciation recapture for the 5 rental years where I took depreciation expense.     Can this calculation be completed within TurboTax?