When you converted the property from personal use to rental, the basis for depreciation was lower of the Adjusted Basis or the FMV on the date of conversion. To figure your basis for depreciation, you could research it online or contact a realtor to get comparable home values on or around 12/26/2016. This will provide documentation for your rental home's basis for depreciation.
No, your gain on the sale of your rental home calculation is not correct. Calculating Gain/Loss on Subsequent Sale of Rental Property
- If a residence converted to rental property is later sold at a gain, the basis in the converted property is the original cost or other basis plus amounts paid for capital improvements, less any depreciation taken.
Note: Upon sale, you may have to pay 25% on your depreciation recapture.
- When you sell a rental, in addition to capital gains, you may have Depreciation Recapture. If you dispose of depreciable or amortizable property at a gain, you may have to treat all or part of the gain (even if otherwise nontaxable) as ordinary income.
- See IRS Publication 544 Chapter 3 Depreciation Recapture :
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