How do I depreciate a former home after it becomes a rental?

Start with the conversion date and the property components.

When a former personal residence becomes a rental, the taxpayer generally needs to separate:

1. the personal-use period from the rental-use period
2. land from building
3. deductible rental expenses from nondeductible principal payments
4. depreciation basis from total property value

Original example:

• Keira Stone moves out of a duplex unit in April.
• She repairs and advertises it in May.
• It is ready for tenants on June 10.
• The property includes both land and a residential building.

Depreciation should focus on the building portion when the property is placed in service for rental use. Land is not depreciable, and mortgage principal is not a rental expense.

The most common exam mistake is jumping directly from purchase price to depreciation without asking whether the property was converted, when it was placed in service, and how much of the value is nondepreciable land.