the cost for rental home depreciation

[sylchang]

How to compute the the cost for rental home depreciation? Should I use the amount you paid for it, or the fair market value at the time I started using it for business? I purchased the house on 2017 for X dollar, and use it as personal use. I start rent it out on 2023, and the market price now is a lot more than X dollar (about X+$10,000). should i put X, or X+$10,000 as the cost? thanks

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It says in the help section:
What determines cost?

The cost (basis) of an asset is the amount you paid for it, plus what you spent to acquire it, such as freight, installation, sales tax, and legal fees.

Select your property below to learn how to determine its cost.

Personal-use property converted to business use

The cost is the lesser of the item's fair market value or your basis for this property (how much you've paid for it, including whatever you spent to acquire it) at the time you started using it for business.

[AnnetteB6 · Accepted solution]

Based solely on the information in your question, the rental property depreciation would be based on $X (minus the cost of the land) because it is lower than $X + $10,000.  

That being said, when you enter the information into TurboTax in the Rental Income and Expenses section of your return, you will be asked to enter the original cost of the property along with any improvements or other items that would change the basis.  You will also be asked to enter the fair market value of the property at the time it was converted to a rental property.  Then, TurboTax will determine which value to use for the depreciation calculation.  You do not have to decide which is the correct value.