How to calculate depreciation on a rehab rental

[Gregory Zakas]

I've scoured the interwebs and youtube and can't find this answer. I understand that you can depreciate the value of the actual property (not including the land) over 27.5 years, but I can't find if that value is adjustable based on ARV. For instance: I buy a property for $80k and then I put $40k rehab into it. ARV is $160k. Am I able to depreciate based on the ARV or am I stuck with using the value of the property based on my initial purchase of $80k?

Thank you guys for your input!