Calculating % business use of home from longer than available records

[Alik]

Sold a home which had business/rental use the percentage of which varied throughout the years.
IRS keep and requires you to keep records for only 7 years (except in special circumstance).
I've owned the home for 23 years.
How do i determine total % business use if I don't have all nearly quarter century of the records?

Note: I am not asking how to find total accumulated depreciation. I know that part. Just the % use for the capital gains <homeowner-exclusion vs. business> allocation.

[PatriciaV]

If you don't have a complete record of the home's business/rental use since you first began using it for those purposes. you will need to estimate the missing information. From whatever records you do have and your own recollection, estimate the business/rental use for each year then calculate the average. 

As a check on your estimate, you might use your tax returns for the last several years. If you don't keep your returns, you can request copies from the IRS by submitting Form 4506, Request for Copy of Tax Return. Refer to the form for the processing time and fee.

Be sure to keep your calculations should you later need to prove how the percentage was calculated (unlikely). 

[Alik]

Thanks. I do have the last 7 years tax copies. The rest of our response is pretty much what I assumed. But I guess my real [implied] questions were: What happens in case of an audit? Could they refuse to accept an estimated figure? Can they, given that there is only 7 years records requirement? Is there an accepted methos of estimating vs. not-accepted?

[RobertB4444]

In the event of an audit the IRS accepts documented deductions only.  If you can't prove a deduction it is removed from your tax return.  There is no accepted estimate method because there are no accepted estimates.

Presenting the last 7 years of tax returns to document the calculation used for business usage percentage is probably a pretty good amount of coverage.  You might consider using the percentage generated by whatever you have available to prove it.

@Alik 

[Alik]

Thanks. But in this case it's sort of the opposite of a deduction.
I qualify for primary homeowner exclusion on the capital gain on my home. But not on the whole amount. Part of it is NOT excluded because it was a business/rental portion use of the home, which is what we're trying to estimate.
So what happens if they don't accept the estimate of the business use %? The insist that all of it was personal use? That's less tax, not more.

[RobertB4444]

You're asking what the IRS will do during a hypothetical audit?  That's impossible to say.  But they could also say that it was 100% business use in your case.

Like I said, best to use what you have documented.

@Alik