USA Residential Rental Property

[HJS]

In July of 2005 my client bought a building that had three residential apartments and one commercial retail store that was classified by the prior Accountant as a residential rental and depreciation commenced at a life of 27.5 years. In January of 2015 a restaurant was established as an S Corp(also the owner of the building) on the street level of the building . The square footage of the restaurant was approximately 45% or the total square footage of the building and my client kept his personal residence above the restaurant utilizing the balance of the square footage . Can or does the building need to be converted to a "commercial rental property" and if so what basis is used for the conversion?