Carl
Level 15

Investors & landlords

Cost basis is the *LOWER* amount of:

1) What you paid for the property when you originally purchased it, plus the cost of any improvements you made *at* *any* *time* during your ownership, or;

2) The FMV of the property on the date you converted it to a rental.

It is not common for the FMV of the property to be the lesser amount.