Personal property converted to rental

[Rick S.]

We made improvements to our personal property in 2011. We began marketing the property as a rental in mid 2012. Can we add the improvements made in 2011 to our cost basis for calculating depreciation?

[Steven Hamilton II]

Rick S.,

Tell us a bit more about the situation. Yes, you add it to the basis as it was not placed as a rental until that time. Was it previously rented?

You will use the lower of your cost basis or FMV on the date the rental was converted.

-Steven