We bought our primary residence 20 years ago. A 2 bedroom condo. Then bought a one bedroom unit next door 18 years ago. Then combined the two units 10 years ago. Mid last year we moved out to a different state and although we wanted to sell our place, the market was so bad that we rented out the combined place as one large 4 bedroom unit.
Q. How do we account for the two asset pins for one rental?
Need to account for capital improvements (cost of gut-rehab of the two units 10 years ago) and new appliance that were added in 2024 just before renting it out.
We hope to eventually sell the large 4 bedroom condo and need to be sure we get the accounting and taxes right.
Any help is greatly appreciated.
1. You have one asset acquired over time. The rental start date is one number for the whole unit.
2. Your basis is the amount paid for each plus improvements and expenses to prepare for rental.
3. The basis used for depreciation is the lower of fair market value or your basis.
See About Publication 527, Residential Rental Property ... - IRS