what is cost basis and depreciation for a rental unit abroad?

[zlyvyrostekhugo]

US citizen, purchased apartment overseas more than 20 years ago, before living in the usa and becoming citizen, for very low cost (10k) now worth substantially more (~60k). 

it was put to rent 2 years back (converted from unit for grandma), and turbotax asked about cost basis for depreciation. What is used? price for purchase 2o years back (10k) or my best estimate of FMV when it was converted to rental 2.5 years back  (maybe ~$55k)? 

How is it treated? how do you decouple land and house value (when we speak about blockhouse with 96 units and only one unit is owned? 

Last but not least, If i did it wrong last year (went with low cost, ended up with -$200 depreciation - which is comically low) can I change it it turbotax or it will be a problem and red flag? 

[Mike9241 · Accepted solution]

When real or personal property is converted from personal use (grandma) to rental use, the depreciable basis is the lower of cost and FMV as of the conversion date. However, you can include the cost of any capital improvements made during the period you owned it, also following this rule. If you paid in a foreign currency, it must be converted to US dollars. Can't help with land cost. 

https://www.irs.gov/individuals/international-taxpayers/yearly-average-currency-exchange-rates  

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[zlyvyrostekhugo]

the depreciable basis is the lower of cost and FMV as of the conversion date...

so, just for clarity, for depreciation basis, do I use 10k for which it was purchased in 2002 or ~45k which is my best guess for fair market value in middle of 2022 when it was put to rent?  

[Carl]

For overseas residental rental real estate you do your best guess as to the value of the land and the value of the structure on that land. The value used for depreciation is the "lessor" of a) what you paid for it when originally purchased, or b) the FMV of the property at the time it was placed in service as a rental. Typically, the value you use will be what you paid for it when originally purchased since the value of the property at the time it was placed in service is most likely higher now. 
Foreign residential rental real estate is depreciated over 30 years, whereas domestic residential rental real estate is depreciated over 27.5 years. So as you work through the program make sure you select the option to indicate that this is foreign property so it's deprecated using the correct depreciation tables.