How do I calculate the cost basis of my rental property for depreciation?
Loan fees and closing cost are normally filed elsewhere on your tax return as a one year deduction instead of being depreciated since you won’t have to prorate percent of closing for the land and the percent for improvements each year. Get your property tax statement for the year you bought the house, from the county the house is in. The property tax statement will list two prices. One is for land, the other is for improvements (house garage, etc). You can not depreciate land, you can only depreciate the improvements. Next the tax statement will give TCV (True Cash Value) or FMV (Fair Market Value) for the improvements. This amount is the initial basis for your cost. Add to the initial basis any improvements done specifically for the purpose of putting the house into rental service. Keep in mind, since you lived in it, anything done prior to 90 days of putting the house into service will not be considered basis of rental property. Anything done prior to 90 days will be considered ordin
