Here is what the IRS says about reporting rental income.

In addition I worked for the IRS, and Ive appeared on radio, TV and in news print as a real estate expert.

My question is, how does the IRS refund or credit the depreciation costs back to me as the tax payer?

@Brent Coombs Alternative Minimum Tax.https://turbotax.intuit.com/tax-tools/tax-tips/IRS...

The IRS looks at it as you were allowed to deduct depreciation because you were keeping the property as an investment, oh you're not keeping it now, well we're taking back that favor. 

Does an investor who manages his own rental property need to qualify as a Real Estate Professional (from an IRS perspective) to deduct a portion of his or her principal residence's mortgage payment due to maintaining a home office?

Although the tax code doesn’t state exactly how long you must hold the property for rental purposes, most tax professionals agree that one to two years is long enough, provided you can demonstrate the property is used for business or investment purposes.The IRS is clear on two points: Merely declaring your house is a rental property isn’t enough.You can’t live in your house at all while it’s a rental property and you must actually rent it out for some period of time

When running your numbers, count 10% in sales costs and a chunk for IRS taxes at your marginal rate.  

Hi John,If you pay a contractor hourly then the IRS may deem them as employees in which case you will need to withhold taxes.

https://www.theentrustgroup.com/FMV "It is required by the IRS for proper tax reporting.If you are using a third party to evaluate the value of an asset, the valuator must sign and date the form.The form must be sent to Entrust with supporting documents.A separate FMV Form must be completed for each asset held in your account."