Less than most people expect. When you convert a residence to a rental, your depreciable basis is the lower of your adjusted basis or the home’s fair market value on the conversion date, and land is never depreciable. If you bought the property for $1.2 million and added $100,000 in improvements and the home is now worth $3 million, you depreciate from the $1.3 million adjusted basis minus the land portion, not from the $3 million.
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