Let's calculate basis:
- Start with your basis in the house of what you paid in 1978.
- Now, add any improvements. Did you add a fence, plant trees, add a room, etc?
- Subtract depreciation. You depreciated the house based on the 1978 value + improvements so you need to know the depreciation amount. You did not depreciate the land, land does not depreciate. See the instructions at About Schedule E (Form 1040), Supplemental Income and Loss, line 18 for help
- Add closing fees. Your costs to sell the property, realtor fees, etc.
For complete details on selling a rental, see Publication 527 (2020), Residential Rental Property - IRS.
Records can be tough and if you are audited, you will need to be able to prove things. Pictures are great. If you have some from when you purchased the home and pictures of parties and things through the years showing changes are great evidence!
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