What would I enter for the cost basis of a Rental Asset that used to be my primary residence?

[cukojo]

Hi, I bought a condo in 2015 for $230k and I used it as my primary residence before converting it to a rental at the beginning of 2023 (100% rental for entire year). This property still has a mortgage, if that makes a difference. I'm a bit stuck at what to fill in the "Cost" box in the "Tell Us About This Rental Asset" view.

What would I enter here for the cost basis of this Rental Asset? Would it be that $230k even though I purchased it years ago and is currently being financed?

Thank you!

[Anonymous_]

For the purposes of depreciation, your basis would be the lesser of your adjusted basis (typically cost plus any improvements made) or the fair market value of the property on the date of conversion to rental use.

[DianeW777]

The cost for you is going to be the lesser of actual cost, plus any capital improvements OR the fair market value (FMV) on the date of conversion.

FMV means what a willing buyer and a willing seller would sell or purchase the condo for today.  It's likely you will use the cost assuming the value of real estate has gone up in your market.  You will enter the purchase date and then the date it was converted/started to become rental and TurboTax will know the correct depreciation.  The method will be straight line mid-month over a 27.5 year cost recovery.

If you purchased any land with your condo you must also know the cost of that.

@cukojo