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lemonfbaker
Returning Member

Bought home 1989, 75k, converted to rental 1/1/16

bought home 1989, 75k, converted to rental 1/1/16, appraisal 225K, all my additions to the house since 89 make my total 75+125 =200  lot value 30k....so is my basis 200k-30k =170k?  do I input 200k in the cost area and 30k in the land cost area?  the 125k in improvements were made over the period 1989-2015
1 Best answer

Accepted Solutions
view2
New Member

Bought home 1989, 75k, converted to rental 1/1/16

If you used the property for personal purposes before changing it to rental use, its depreciable basis is the lesser of its adjusted basis or its fair market value when you change it to rental use. 

Figuring the basis.   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.[separate land value ,land is not depreciated]

Turbotax will separate when you enter the total calculated adjusted value{$230,000}then the land value.[$30,00}

Your purchase date is entered on this screen.[1989]

Continue

Screen "Tell us about This Rental Asset"

No To : Have you  used this item 100% for this business since you acquired it?"In the drop down select first  used for personal before business.

Ensure you use date placed in service ready to rent 1/01/2016 [100% is from this date]

Some expenditures that a homeowner consider improvements may actual be repairs ,if the appraisal was done by a real estate professional and not a tax assessor appraisal.

View solution in original post

2 Replies
TaxGuyBill
Level 9

Bought home 1989, 75k, converted to rental 1/1/16

Yes, you would enter $200,000 for the total basis, and $30,000 for the cost of land.

However, when you sell the property, TurboTax may not do it correctly unless you really know what you are doing, so whenever that happens, you may want to go to a tax professional, or at least post a new question here.
view2
New Member

Bought home 1989, 75k, converted to rental 1/1/16

If you used the property for personal purposes before changing it to rental use, its depreciable basis is the lesser of its adjusted basis or its fair market value when you change it to rental use. 

Figuring the basis.   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.[separate land value ,land is not depreciated]

Turbotax will separate when you enter the total calculated adjusted value{$230,000}then the land value.[$30,00}

Your purchase date is entered on this screen.[1989]

Continue

Screen "Tell us about This Rental Asset"

No To : Have you  used this item 100% for this business since you acquired it?"In the drop down select first  used for personal before business.

Ensure you use date placed in service ready to rent 1/01/2016 [100% is from this date]

Some expenditures that a homeowner consider improvements may actual be repairs ,if the appraisal was done by a real estate professional and not a tax assessor appraisal.

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