Instructions 8829 Part III

Forum|Forum|1 year ago
February 2, 2025
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Hello TT Community.

For the following section of Form 8829, I read in another post that in order to determine what the values of lines 37 & 38 are, I should go to my property tax assessment made by the County.

Are "cost or other basis / fair market value" synonymous with "assessed value" as shown below?

Note the example values below are not market values of the home. The original purchase price of the home was almost double the assessed total value.

So, if the home business out of the home started in 2021, is it correct to say in this example, I would enter "Total AV = $125,950" for line 37 and "Land AV = $55,220" for line 38?

Thanks!

carriskoulAuthor

OK I found one suggestion on-line that answers my earlier post.

I would use the land/total property ratio determined by the county assessor.

However, I would not use those exact values for reporting on lines 37 & 38 since they are only used for property tax calculations (i.e. not what I would use for the cost basis or FMV).

Now here is my follow up question:

-If home was purchased in 1998 at $217,500

-but started business use of home on 1/01/2021

Is the lesser of the cost basis of home/land or FMV of home/land used for reporting on line 37 & 38 based on the 2021 values or the original purchase price in 1998 (even though I started using it for business use in 2021)?

Thanks.

AnnetteB6

The values you need to consider are these:

- the cost of the home/land when purchased in 1998, which would be the same as the basis when it was first used for business in 2021

- the FMV of the home/land when it was first used for business in 2021

Typically, unless you have made improvements that add to the basis of the property, then the basis when it was first used for business would be the same as the cost when it was purchased.

Whichever of these values is lower as of the date the property was first used for business is what you use on lines 37 and 38.

@carriskoul

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