For determining the cost basis of your new rental property, use the statement from when the property was purchased 7 years ago. Here is a summary of how to account for the cost basis.
- Original Purchase Price: Start with the amount you paid for the property.
- Add Capital Improvements: Include costs for significant improvements (e.g., new roof, kitchen remodel).
- Adjust for Depreciation: Account for any depreciation if the property was used for rental purposes.
For more details, you can check out TurboTax Guide on Selling Rental Property and IRS Publication.
