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It is all about timing. All improvements you did before you put the place on the market has to be added to the basis of the property (purchase price + improvements = adjusted basis)
For the basis for depreciation you will need to take lower of fair market value on the day of conversion and your adjusted basis. Than you reduce the amount by the value of the land. You will have to use mid-month convention for the house depreciation, meaning if you start renting it in jun, you will take 7/12 of your yearly depreciation in the firs year.
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