We bought some property 24 years ago; one large primary residence and two smaller rental cottages. Now that we're getting to the downsizing stage of life, we want to sell the small cottage but are concerned because of depreciation over the precious 23 years. To complicate matters I do not have the tax records to show the exact amount of depreciation taken. Current records show $1636 as the depreciation taken for the last 7 years. If I assume this is the same amount taken since tax year 1999, $35,992 is possibly the amount of total depreciation taken. I've always used $45K as the purchase price. To explain this statement a bit, we bought the property from the seller as part of a three house deal for a total of $185K in late 1998. I broke this figure down as $45K for each cottage and the balance on the primary residence.
Without boring anyone further does a possible course of action on how I should proceed come to mind?
2 things should be said: I sold one cottage to my son a year after I bought it for $45K; and we still live in the primary residence, currently appraised at $419K.
