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posted Jan 30, 2019 12:39:34 PM

Determine cost basis of a rental property live in 8 years

I purchase a house 380K in 2010 and last year May 2018 moved to a new house and rental old house in July. 

 

I had the house appraised in August (600k). how do I determine cost basis for this house ? 

 

Based on 380K ? Land or building 

Based on 600K ? Land or building 

0 2 681
2 Replies
Employee Tax Expert
Feb 5, 2019 7:57:26 AM

Your cost for the converted rental is going to be your adjusted basis on the building at the time of the conversion. Adjusted basis will be roughly cost + improvements - land. This will be the amount that you depreciate for the rental.

Level 1
Feb 5, 2019 9:16:04 PM

True only because the FMV exceeded basis at the time it was converted to rental.  If the FMV were lower, that would be the basis for depreciation.