Adjusted Basis of Rental Property?

[Brian Bellanca]

Hi All,

I have a rental property that I sold in 2018. I lived in the property for approximately 2 years, rented it approximately 1. My question is related to my adjusted basis on the home as this directly affects my reported gains. For the years that I rented the property - can I use property tax and mortgage interest as increases to basis or am I limited to only repairs / direct costs associated to updating and maintaining the property?

[Ashish Acharya]

Originally posted by @Brian Bellanca:

@Ashish Acharya @Joshua Jarrett - Thank you for the input all, here is the reference my tax guy sent over... is this inaccurate? 

https://scholarworks.sjsu.edu/cgi/viewcontent.cgi?referer=https://www.google.com/&httpsredir=1&article=1029&context=contemp_tax

 Why is your tax guy asking you to interpret the rules? You are paying him for that. 

No, that is not applicable to you. If you bought a property and rented it out for first 3 year and move in for last two year before selling, then non qualified use comes into play. You still lived and owned for last 2 of 5, but it was before you moved in.  

The rental period after you move out  for last three is not counted as non qualified use.  That is an exception. 

Again, there is no non qualified use and your tax is only depreciation recapture tax.