The basis for depreciation is the lesser of
:•The fair market value of the property on the date you changed it to rental use; or
•Your adjusted basis on the date of the change—that is, your original cost or other basis of the property, plus the cost of permanent additions or improvements since you acquired it, minus deductions for any casualty or theft losses claimed on earlier years' income tax returns and other decreases to basis.
Now as indicated the house has appreciated from 2015 to 2020 (conversion) somehow I have to justify to get the highest cost possible, so in the future now am I wrong on the statement Adjusted basis on the date of the change (than isn't the change the same as the change from home to income property?) or am I missing something. Ideally the delta should be nill , but if I read from the purchase price we are in trouble to over $100K, (certainly not at this stage, it does affect MACRS, depreciation / 27.5yrs but also future capital gains.
Thanks for the help
