Hi,
I went back to check tax filing in 2016. Luckily I did include the cost of condo purchase such as transfer tax, legal fees, and also major renovation cost - this resulted in an adjusted cost base. Turbo Tax then compared the adjusted cost base and fair market value of the rental property and Turbo Tax decided to use the lower of the two values - the fair market value as the cost base for depreciation. This was done automatically by TurboTax. Is this the right way to do depreciation for rental property?
My second question is: taking into the consideration the above, when I sell the rental property, do I use the fair market value (which was the purchase price) as the cost base or do I now add the transfer tax, legal fees and renovation cost back to the base?
My final question is: in the year when the rental property is sold, am I allowed to depreciate? if so, do I depreciate the whole year or part year only?
Thanks
