Your computations appear to be related to your adjusted basis computations. These computations are not unreasonable.
For instance, the determination of the 80% improvement - 20% land is a reasonable stance and is tied to the original purchase price.
You may include the cost of improvements into the basis calculations. The cost of your own labor may not be added into the cost. For instance, if I paid a carpenter $10,000 to build a deck, the cost basis of the deck as an improvement would be $10,000. If I paid $4,000 for deck materials and built the deck myself, the cost basis of the deck as an improvement would be $4,000.
Assuming the appraisal has sufficient detail, the appraisal for purposes of the PMI change may be used. I would also review the valuations from the online services to see whether the numbers are similar.
IRS Publication 551 Basis of Assets, page 10 states:
If you hold property for personal use and then change it to business use or use it to produce rent, you must figure its basis for depreciation. An example of changing property held for personal use to business use would be renting out your former main home.
Basis for depreciation
The basis for depreciation is the lesser of the following amounts.
- The fair market value (FMV) of the property on the date of the change, or
- Your adjusted basis on the date of the change.
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