Yes, you can use the tax bill or assessment to determine the land value and building/home value. As far as the cost of the assets when you enter them into the rental activity see the IRS rule.
The IRS requires the use of the lower of:
- fair market value (FMV) on the date of conversion to residential rental from personal home, OR
- the actual cost of the home
In you case the actual cost of the home, which includes the original purchase price, purchase expenses, capital improvements from the date of ownership until converted and land. You can use the tax assessment to determine the amount to use as the land portion.
- land assessment divided by the combined total of land and home = percentage of cost that should be land
As far as the HVAC, this can be added to the cost basis of the home. The entire cost of the home is depreciated over 27.5 years with a mid month convention. This simply means there is a half month for the month placed in service and month removed from service , then a whole month for all other months.
Note: When you enter the house and the land you will enter the combined total in the amount of the asset, then the land cost. TurboTax will reduce the total by the land and depreciate the correct amount for the house.
In 2023 you fully converted this house to rental, so be sure to say it was rented 100% of the time from the date placed in service and that it was rented at fair rental value (FRV), if that is true. This will allow TurboTax to calculate the proper depreciation.
I would advise to do manual calculations for the rental period of the year for other expenses you had such as utilities, property taxes, mortgage interest, home owners insurance, etc. Next year it will be all handled at 100% of all expenses.
@amyonghwee
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