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URL:  http://boards.fool.com/pub-527-tells-me-to-use-the-lesser-of-cost-11855953.aspx

Subject:  Re: Rental Property Date:  1/23/2000  3:11 AM
Author:  ptheland Number:  25791 of 120809

Pub 527 tells me to use the lesser of cost basis+improvements or FMV at the time I put my love-shack into rental service. Does an assessment notice from my county tax assessor count to fmv? I personally think I may have been able to get a better price at the time, but did not think to pay for an evaluation when I began renting a couple of rooms while I was out of the country.

Tax assessments are usually lousy places to get FMV information for a property. A talk with a realtor might give better info for the recent values.

Also, if I have part of the place (2 of 4 br's) rented out, is 50% of expenses about right? Renters had access to common areas: kitchen, garage, laundry, living room. Additionally, I was gone a good percentage of the time, but what I was charging per room would not have been fmv for the whole house.

Sounds like a reasonable basis for considering costs. You need the FMV of the house for depreciation purposes. Your depreciable basis is the lesser of your cost basis or the FMV on the date you began renting the rooms.

--Peter
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