Unforunately, you have to depreciate the house. However

However, you still gain a little benefits out of it.
1). You essentially defer your tax, which is like a tax-efficient investment.
2). When you sell the house, the recapture tax rate is 25% and I bet your current highest tax rate is at least 28% if not 33%. So you make a little bit saving here.

If you live 2 years out of last 5 years, then 500K capital gains are tax free, otherwise, you own big to Uncle Sam.

I am not a CPA, and this is just my personal understanding.