How to determine cost basis (for depreciation)

[Tamas Z.]

Hello,

I have a newly-purchased residential rental property, and I'm just now setting up my financial tracking for it.

What's the correct number to use as the original cost basis, for depreciation purposes? I'll be splitting the building/land using the public record county tax ratios, but I'm not sure about the initial total to use.

Possible options are:

• Property value shown in the public record (same place that has land/building split visible)
• Amount shown on the appraisal that my lender ordered
• Amount of money I put into it all (effectively sale price plus all the fees I ended up paying)
• Amount shown at the bottom line of my settlement statement

Which of those is correct? My purchase price was lower than the property value shown in the public records (deal between close family friends), and so was the appraisal. Frankly, the appraiser seemed super-lazy, and I bet he just put some number a bit higher than the purchase price so the sale goes through and he could go home without doing any actual work. :-/

Ideally, I'd love to use the county public record as the initial basis, as that would be the highest number, resulting in the highest depreciation deduction.

What's the correct thing to do here? :)

Thanks!