Rental property cost basis

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
Post Reply
Topic Author
Sftblldad
Posts: 1
Joined: Thu Jan 10, 2019 7:41 pm

Rental property cost basis

Post by Sftblldad » Thu Jan 10, 2019 7:47 pm

I sold a previous residence in February 2018 that I had rented out all of 2017. Prior to that, I lived there for 9 years. I sold the house for $338k but paid $372k for it in 2007. How do I determine the cost basis for the property when determining if I get a tax write off for selling a rental property at a loss? My understanding is that I must use the value of the home at the time it became a rental, but that seems like a guess to me. Thank you.

GAAP
Posts: 903
Joined: Fri Apr 08, 2016 12:41 pm

Re: Rental property cost basis

Post by GAAP » Sat Jan 12, 2019 1:17 pm

I used the assessed valuation at the time I placed it into service as a rental.

If you've been depreciating for tax purposes, then you should have a basis...
“Adapt what is useful, reject what is useless, and add what is specifically your own.” ― Bruce Lee

soxfan10
Posts: 18
Joined: Wed Jan 21, 2015 10:38 pm

Re: Rental property cost basis

Post by soxfan10 » Sat Jan 12, 2019 2:09 pm

Initial basis for depreciation purposes is generally the lesser of amount paid or value at the time placed into service as a rental property. Given the short period of time until the sale I would use your sales price to determine basis for rental depreciation (if you didnt already depreciate). Take one year's depreciation off your initial purchase price for renting in 2017 and that should be a supportable basis for the loss on the 2018 disposition.

Edit: Sorry saw the sale for loss.

Post Reply