determining basis when you pay way way below MV for a property

[Andrew Gil]

I'm trying to figure out how to determine my basis for a property we bought way below market value. The entire property of 2 homes was transferred to me for 1 dollar in 2019. I live in one of the homes, and the other is occupied residentially for extremely low to no rent. 

I've spent significant time and funds updating the rental home. I'm Interested in hearing ideas about how you would set this up. Through 2021 I haven't deducted anything related to this home. 

I appreciate your time and ideas. 

Andy 

[Ashish Acharya]

Your basis will be 1$ + all the improvements you have made to the property. Market value doesn't factor in. 

[Michael Plaks]

@Andrew Gil

What is the market rental value of the second property? If it's rented "extremely low to no rent" - then it's not even a rental property under tax law. 

Also, you seem to hint at your desire to account for the value of your time invested in the work. Sorry, never deductible.

[Basit Siddiqi]

Proper tax advice prior to the 'transfer' and renting the second unit would have been helpful and saved some tax dollars.