Didn't depreciate Home Office space? How do I fix?

[bmg60]

In September of 2020, I converted a portion of my home into a Fitness Studio.  I do personal training and fitness classes on a regular basis since then and continue to do so. 

I recently discovered that I should be depreciating that space and I haven't been.  It appears I need to play catch up.  Here are my questions:

1. Must I depreciate that space?  If I don't what are the consequences when I no longer have the business?

2.  We built the house in 2003.  Basis in just the house is $222,000.  FMV at time of conversion was $268,800.  My understanding is that I must use the lower amount for depreciation.  That is my understanding from reading IRS Publication 587 Business Use of Your Home.  Just looking for verification

3.  Turbo tax has calculated my depreciation for 2024 to be $1,452.00, (Cost Basis divided by 39 years multiplied by the calculated percentage of business usage 25.5%).  I am good to this point.

Turbo tax also shows my prior depreciation should total $4,779.00.  Do I have to go back and amend my past returns, or can I adjust my cost basis for what I should have taken and go from there?  Do I need special IRS approval to do that.  This is where I am confused.

FYI, I paid for the "expert" advice, however based on other questions asked, I am not confident in the answers received, particularly question 3.  The expert indicated she couldn't advise me on what to do --file amended returns or do something else?  

Thank you in advance.  

[KeshaH]

Yes, you're required to depreciate any depreciable property. If you don't, and you sell the property later, you'll have to calculate you gain or loss as if you had taken the depreciation. This could increase your gain or decrease a loss.

Correct, your depreciable basis would be the lower of your basis or fair market value.

Because you didn't claim depreciation for two or more years in a row, you'll need to file Form 3115 to make the correction and deduct the missing depreciation all on the 2024 return. This will have to be completed manually within the TurboTax Desktop program.