I am confused regarding determining the cost basis for depreciating a rental property
that has been converted from personal
In 2001 we purchased a condominium for $ 157,500 ( $ 126,000 additions and improvements and $ 31,500 land). Since then we have spent about $ 100,000 in improvements and upgrades) making the theoretical cost basis about $ 226,500 using this option. Unfortunately, we have failed to keep documentation of our expenses since we never intended at that time to rent or sell this property
The city tax assessment
for this property is now $ 212,000 ( $ 169,000 additions and improvements and $ 42,400 land)
We have recently put the property up for sale at $ 315,000 which realistically reflects the true market value according to surrounding comps and agent input. The market is a little slow here and we were thinking of keeping it as a rental property.
The question is: What is the proper way to determine the cost basis of this property, for depreciating it, at the time of conversion. 1) is it possible to have an independent property assessor
assess the current value of the property and use this as the cost basis?
2) can you use the local government
property assessment (which is much lower that true market value), 3) Am I required to use the original cost ( 14 years ago) plus improvements (for which I do not have proper documentation). The latter would also be considerably less than true market value.