Actually, we believe the original construction cost + improvements is more than the FMV at time of conversion in 2016 (it's in a rural area where the housing market hasn't done well until recently)
While not impossible, I highly doubt it's FMV was less in 2016, than what it cost you to build it in 2008. As I recall, the housing market tanked towards the end of 2008. While your chances of an audit may be extremely low, If I were an IRS agent auditing you, I'd want proof.
I assume you did depreciate the property from the time you placed it in service in 2016, up to the closing date of the sale, assuming it was a rental all that time. If so, then you had to use a cost basis for depreciation, which I'm confident would have been what you paid for the house originally, plus the cost of any property improvements you did to the house before and after converting it to a rental. Most likely, you'll be fine if you use that cost basis, which is pretty much automatic if you report the sale in the rental property section of the program.
Reporting the Sale of Rental Property
If you qualify for the "lived in 2 of last 5 years" capital gains exclusion, then when prompted you WILL indicate that this sale DOES INCLUDE the sale of your main home. For AD MIL personnel who don't qualify because of PCS orders, select this option anyway, because you "MIGHT" qualify for at last a partial exclusion.
Start working through Rental & Royalty Income (SCH E) "AS IF" you did not sell the property. One of the screens near the start will have a selection on it for "I sold or otherwise disposed of this property in 2021". Select it. After you select the "I sold or otherwise disposed of this property in 2021" you continue working it through "as if" you still own it. When you come to the summary screen you will enter all of your rental income and expenses, even if it's zero. Then you MUST work through the "Sale of Property/Depreciation" section. You must work through each individual asset one at a time to report its disposition (in your case, all your rental assets were sold).
Understand that if more than the property itself is listed in your assets list, then you need to allocate your sales price across all of your assets. You will only allocate the structure sales price; you will NOT allocate the land sales price, since the land is not a depreciable asset. Then if you sold this rental at a gain, you must show a gain on all assets, even if that gain is $1 on some assets. Likewise, if you sold at a loss then you must show a loss on all assets, even if that loss is $1 on some assets.
Basically, when working through an asset you select the option for "I stopped using this asset in 2021" and go from there. Note that you MUST do this for EACH AND EVERY asset listed.
When you finish working through everything listed in the assets section, if you ever at any time you owned this rental you claimed vehicle expenses, then you must also work through the vehicle section and show the disposition of the vehicle. Most likely, your vehicle disposition will be "removed for personal use", as I seriously doubt you sold your vehicle as a part of this rental sale.
