Your basis for depreciation would be what you paid for it, plus what you paid your spouse for her half, plus the cost of improvements, or the fair market value, whichever is lower.
When a personal residence is converted to business use (or for use in the production of income), its starting point for basis for depreciation is the lower of
(1) the adjusted basis on the date of conversion, or
(2) the property’s fair market value (FMV) at the time of conversion (Regs. Sec. 1.168(i)-4(b)).
**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
