I’m doing my 2024 taxes: In what year should I record as a starting date for depreciation and for what adjusted cost basis?
I purchased a house in 1977 for $45,500, rented the property from 1984 until 2008, In the middle of 2008, my daughter moved into the home, she was not paying rent.
In 2013, I obtained building permits and made $255,000 in improvements/addition. In October 2016, my daughter moved back into the home, when I obtained closure of my final building permit.
In August 1, 2016, my daughter temporary moved out of the home to earn her degree in another state. I then had an individual stay in the home who did not pay rent at the market rate so I reported monies received as other earned income on line h 1040SR, never used Schedule E, did not depreciate, and never reported my losses. My daughter was planning to move back into the home after obtaining her degree, we wanted an house-sitter.
In 2020, COVID hit and the house-sitter stop paying the fee and finally moved out of the home on May 28, 2023. In February 2024, I found a tenant who is now paying market rate rent.
When calculating depreciation for my 2024, taxes, do I say my business started in 1984, and depreciate $18,500 ($45,500 minus prior reported depreciation of $27,000,) and add the $255,000 as an added asset to begin depreciation in 2016, OR do I record $18,500 starting in1984, and add the $255,000 as an added asset in the year 2024, when I began receiving market rate rental income?
