Other Tax Questions
Questions and comments on other topics covered in Fairmark.com, such as UTMA accounts, and any tax questions that don't fit our other categories.
cost basis for depreciation
Posted by: JR_TX, April 9, 2017 01:05PM
I am renting a house we lived there for many years. The house has appreciated since we bought it.
when it comes depreciation, do you use original purchase price or current market value?

let's use example
Purchase date: 2000
Purchase price in 2000: 100k (excluding land)
Lease year: 2017
Market value in 2017: 200k (excluding land)

do you use 100k or 200k as basis to depreciate?

Re: cost basis for depreciation
Posted by: kaneohe, April 9, 2017 01:41PM
[www.irs.gov]

according to link, the lesser of the two. There is a more extensive discussion in the link.

"Basis of Property Changed to Rental Use
When you change property you held for personal use to rental use (for example, you rent your former home), the basis for depreciation will be the lesser of fair market value or adjusted basis on the date of conversion."




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