@chuckjim
My mistake, I thought you were trying to calculate the cost basis so you could sell and determine your capital gains.
@M-MTax
I think we have a different understanding of what the $450,000 was. But we need to clarify.
@chuckjim
How much did you pay to originally build the house? That is your cost basis. If you paid $450,000 originally, and then there was a fire, you received $560,000, and you rebuilt the house, then the fire and the insurance payout are ignored and your cost basis is still $450,000. However, if you paid something different to originally build the house, then you received a $560,000 insurance settlement but only paid $450,000 to rebuild the house, then the calculation becomes much more complicated, and we need to be completely clear on the details.
And finally, whatever your cost basis is, you must subtract something for the value of the land, because land doesn’t depreciate. Even though you have no cost basis in the land because of how it was acquired, you must subtract the value of the land from your depreciation basis when you list the property as a rental.
