question about cost basis

[Daniel Miller]

Okay, I searched these forums for this question, but none of them quite addressed my situation, and in the meantime, the more I read, the more confused I got!! So please permit me to ask this question from scratch:

My father owns a house in San Jose, CA. He has dementia and is living elsewhere now. I am his legal agent and am renting out his house (after considerable wise advice from all of you here!!). All is going quite well.

However, I am confused about tax issues. When I did his taxes for last year, I disregarded depreciation completely. The reason was that they asked for the "cost basis" of the house, and I chose not to deal with it then (since it had only been rented for two months, and I had so many new issues to deal with).

However, this year I will have a full year of rent to declare, and I'm going to need some big deductions to offset that. So I need to clarify what the cost basis of his house is.

A friend of mine who also rents out houses told me that I could go to county records and find the cost basis there. The only value that I can find in his property information is "assessed value", but from reading past messages here, I've read conflicting information about whether that "assessed value" is the "cost basis", or not??

My parents bought the house in 1974, and it falls under Prop 13 protections, which means its assessed value has not changed much since they bought it, for something around $74,000... however, they've done extensive improvements and expansions to the house over the years, which probably alter the cost basis considerably, true??

So I would appreciate any advice or pointers that anyone could offer!!

Thank you again for all your excellent past and future assistance!
Dan Miller
San Jose, CA