I fear we may have used the wrong amount for the basis when figuring depreciation on our rental. We switched our home to a rental back in 1992. We have been fortunate to have the same renters for 22 years. They just moved, so we are considering selling the rental and have been researching how we will be affected by capital gains.

The house was built and financed back in 1982 for $61,566. When we started using it for a rental in 1992, the FMV was $98,500. ($90,000 for the house and $8,500 for the land). We thought this was the correct amount to use, and so depreciated $1600 the first partial year and $3273 each year since.

It has just come to my attention that we should have used the lesser of FMV or the original purchase price for depreciation, which would have been the $61,566 amount.

Is there any way to correct his besides doing 22 years worth of amended taxes? The house in in another state, so we would have to amend 22 years worth of state taxes as well! Arrrrrghhhh!! Thank you.