turbotax icon
cancel
Showing results for 
Search instead for 
Did you mean: 
turbotax icon
cancel
Showing results for 
Search instead for 
Did you mean: 
turbotax icon
cancel
Showing results for 
Search instead for 
Did you mean: 
turbotax icon
cancel
Showing results for 
Search instead for 
Did you mean: 
Announcements
Event: Ask the Experts about your refund > RSVP NOW!
Close icon
Do you have a TurboTax Online account?

We'll help you get started or pick up where you left off.

null15
New Member

What is my cost basis on my residential rental property if I lived there for 10 years prior to renting it out?

 
Connect with an expert
x
Do you have an Intuit account?

Do you have an Intuit account?

You'll need to sign in or create an account to connect with an expert.

7 Replies

What is my cost basis on my residential rental property if I lived there for 10 years prior to renting it out?

What are you trying to do?
Did you just start to rent it out in 2016, and you are entering the "asset" for depreciation?
Or did you sell the rental property and are trying to report the sale?
null15
New Member

What is my cost basis on my residential rental property if I lived there for 10 years prior to renting it out?

I am entering the asset for depreciation.  Based on TurboTax Colleen's response, I believe I can figure out what to do.  The Fair Cash Value on my 2015 tax bill is $63,100 and the land value is $2,600 (it's a condo unit) so I would use $60,500 as the cost basis. Sound right?
Another question:
I actually started renting it out in 2015.  For my 2015 taxes, I didn't know what to do so I (incorrectly) had the cost basis and the cost of the land both as $70,000 so TurboTax calculated it as fully depreciated and I didn't get any deduction for depreciation.  If I update the information on the 2016 taxes, will I need to do anything further or special to correct it? Thanks.

What is my cost basis on my residential rental property if I lived there for 10 years prior to renting it out?

You should amend your 2015 tax return to correct the depreciation.
<a rel="nofollow" target="_blank" href="https://ttlc.intuit.com/questions/1894381-how-to-amend-change-or-correct-a-return-you-already-filed"...>

Some tax bills report a fairly accurate amount for the valuation, but others don't.  Does $63,100 seem about right?  You may try Zillow.com to get another perspective.  For the rest of this comment, I'm going to assume that $63,100 is accurate.

Is $63,100 less than your Adjusted Cost Basis?  Adjusted Cost Basis is usually (1) purchase price, (2) plus cost of improvements, (3) minus any depreciation taken before it was a rental, such as for a Home Office.  If $63,100 was less than the Adjusted Cost Basis, you are correct and $63,100 is what you should use.

You are right that the Basis for Depreciation would be $60,500, BUT you should enter the total amount ($63,100) and then the amount for land ($2,600).  Then TurboTax does the math.

If you amend your 2015 return to correct the depreciation AND you have already transferred your 2015 tax return information into your 2016 tax return, make sure the "prior depreciation" is what you claimed for depreciation on the 2015 tax return.
null15
New Member

What is my cost basis on my residential rental property if I lived there for 10 years prior to renting it out?

$63,100 is approximately what zillow shows the value was as of June 2015 so I'm okay with using it.

I bought it pre-crash for over $100K so yes, $63,100 would be lower.

Will do on letting TT do the math.

Yes, I will amend the 2015 return and I have already transferred my 2015 info into 2016 return.  So the "prior depreciation" on the 2015 return was $0, so that is what is currently listed on the 2016 return.  Is that what it should be?   Thanks.

What is my cost basis on my residential rental property if I lived there for 10 years prior to renting it out?

No, when you amend the 2015 tax return, you need to see how much depreciation will be taken on the 2015 tax return for the house (if that is the ONLY thing being depreciated, it will be the amount on Line 18 of Schedule E).  Then you enter that amount for the 2016 "prior depreciation".

As a side note, because the Fair Market Value was lower than the Cost, when you eventually SELL the property, you may have some special procedures to do.  You may want to ask a question here, do some research, and/or bring it to a tax professional whenever that happens.
null15
New Member

What is my cost basis on my residential rental property if I lived there for 10 years prior to renting it out?

Is there a way to obtain my Form 4562 that was submitted with my 2015 taxes?
Coleen3
Intuit Alumni

What is my cost basis on my residential rental property if I lived there for 10 years prior to renting it out?

When a personal residence is converted to business use (or for use in the production of income), its starting point for basis for depreciation is the lower of (1) the adjusted basis on the date of conversion, or (2) the property’s fair market value (FMV) at the time of conversion (Regs. Sec. 1.168(i)-4(b)).

Example : I purchased a home in Boston in 2004 for $250,000, of which $50,000 represented the cost of the land. I lived in the home until 2008, when I moved to New York. Rather than sell the house, I converted it to a rental property. The property’s FMV, excluding the land, on its conversion to rental property was $185,000. My basis for depreciation is $185,000, the FMV at the time of conversion, since it was less than the adjusted basis. (Adjusted basis is generally the cost of the property plus amounts paid for capital improvements, less any depreciation and casualty losses claimed for tax purposes.)

message box icon

Get more help

Ask questions and learn more about your taxes and finances.

Post your Question
Manage cookies