Cost Basis for a rehab?

[Elizabeth Blazina]

Hi , I am curious when buying a rehab using the Brrr method.. Do you use your actual purchase price plus any added improvements as the cost basis for depreciation.   Or can you use the new Appraised value minus the land portion as your Cost basis?    

[Ashish Acharya]

Originally posted by @Elizabeth Blazina:

Hi , I am curious when buying a rehab using the Brrr method.. Do you use your actual purchase price plus any added improvements as the cost basis for depreciation.   Or can you use the new Appraised value minus the land portion as your Cost basis?    

 You cannot use the new appraised value. Actual purchase price + some closing costs+ improvements - Land value