Determine cost basis on primary residence turned into a rental

3 Replies

Given that you can depreciate a residential property over 27.5 years - if we buy a new home & turn our old primary residence into a rental - does the depreciation start from the date the home is turned into a rental or is it reduced based on the number of years we lived there prior to turning it into a rental?  FYI - we bought the home in July 2009.  

@Joseph Davis , you depreciate property when you place your property in the rental service not when you initially bought as the primary residence. 

Originally posted by @Joseph Davis :

Given that you can depreciate a residential property over 27.5 years - if we buy a new home & turn our old primary residence into a rental - does the depreciation start from the date the home is turned into a rental or is it reduced based on the number of years we lived there prior to turning it into a rental?  FYI - we bought the home in July 2009.  

You will still depreciate the residence over 27.5 years, starting from the date the property is placed in service. Cost basis is the lower of your adjusted tax basis or fair market value on the date the property was placed in service. For most taxpayer, cost basis is the adjusted tax basis = purchase price + improvements made to the house 

Originally posted by @Joseph Davis :

Given that you can depreciate a residential property over 27.5 years - if we buy a new home & turn our old primary residence into a rental - does the depreciation start from the date the home is turned into a rental or is it reduced based on the number of years we lived there prior to turning it into a rental?  FYI - we bought the home in July 2009.  

You will still depreciate the residence over 27.5 years, starting from the date the property is placed in service. Cost basis is the lower of your adjusted tax basis or fair market value on the date the property was placed in service. For most taxpayer, cost basis is the adjusted tax basis = purchase price + improvements made to the house 

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