Safe Harbor for Small Tax Payers says "Annual expenses for repairs, maintenance, and improvements, cannot exceed the lesser of $10,000 or 2% of the building’s unadjusted basis"
What is the 2% of building’s unadjusted basis here?
Let us say I bought my primary home for 500,000. Initial loan costs is 2,000. Capital improvments I made when I used the property as primary home for 4 years is 15,000. If I convert my property to rental now, what would be by building’s unadjusted basis.
Assuming my building value is 50% and land value is 50%, would my building’s unadjusted basis be 50% of 500,000 or 50% of 502,000 or 50% of 517,000?
