Investors and rental owners

It must be reported as a capital expense and depreciated annually.  That portion of your home would be treated as a revenue property once you acquire  paying tenants. On the sale of the home, capital gains may be payable, based on the calculation of market value or actual sale value of the home, less repair and maintenance, real estate fees and any other expenses.  Be aware there may be a recapture of depreciation after a sale.