Tax question regarding deduction and depreciation in one of my rentals

[James Park]

I have a townhome in Chicago that i lived in from Jan 1st - June 30th, 2011. I had this property rented from July 1st - December 31st, 2011. I had a flood in August 2011 which cost me $15,000 out-of-pocket to restore the basement as I did not have flood insurance at the time.

My new CPA in Atlanta tells me that since lived in this home for half the year, I cannot depreciate the Chicago rental property in 2011. He also told me that i cannot deduct any of my $15,000 repair costs in 2011, but will carry over to 2012. My AGI, in 2011 will allow me to deduct up to the full $25,000 rental passive loss in 2011. Is my CPA correct that I cannot depreciate or deduct any of the $15,000 basement restoration cost for my 1040 taxes in 2011?