You can have no idea how much I appreciate everyone's input. I wouldn't blame you at all for rolling your eyes at what I'm about to say, but I've done a bit of digging and found out some things that will make the whole issue rather muddy I'm sorry to say.
First of all, I used the taxable value in the year of conversion to rental (2016) as the cost basis in TurboTax. Why? I cannot recall. Let me put some numbers to this to make it real. The taxable value was $110,806 of which land value was $19,800. Where I got the land value from I also cannot recall, although I feel it must have been on a county tax document (that I no longer have, naturally). Because I made an error in TT by misreading the instructions regarding personal use days, I didn't enter zero in that field as it should have been. Therefore, depreciation was zero in 2016 when it should have been $1,793 (1.97%). In each of the subsequent years, 2017-2022, depreciation was $3,337.
I don't know if I'm now forced to use the taxable value as the cost basis since it was the cost basis I originally used, but I know for sure we invested $200,000 at least in the construction (keeping in mind this was a round house that we thought we'd live in forever and so we didn't worry about whether we were spending more than FMV). I've gone through every file I can find and uncovered approximately $120,700 in original receipts for construction and improvements prior to rental.
In addition the appraisal that was done in 2009, shortly after completion of construction, shows a FMV of $170,000 and a cost-approach value of approx $250,000.
Would anyone like to comment further on this mess? Please be gentle if you can 🙂
