The new tax assessment would be helpful in determining the fair market value. Zillow may also be helpful.
This IRS publication says that you would use the lesser of the fair market value of the property or your adjusted basis (your cost).
IRS Publication 551 Basis of Assets page 10 states?
If you hold property for personal use and then change it to business use or use it to produce rent, you must figure its basis for depreciation.
An example of changing property held for personal use to business use would be renting out your former main home.
Basis for depreciation
The basis for depreciation is the lesser of the following amounts.
- The FMV (fair market value) of the property on the date of the change, or
- Your adjusted basis on the date of the change.
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