How do I determine cost basis of property I sold when the original purchase price is unknown?

You've got a few options to establish cost basis when the original records aren't available. First, check with the county recorder's office where the properties are located - they'll have records of all property transfers including the sales prices. You can also request copies of your father's old tax returns from the IRS using Form 4506 (goes back 7 years) which might show depreciation schedules for rental properties. Sometimes title companies keep records from previous transactions too. If your father used a particular title company for his real estate dealings, they might have information about when he purchased the properties and for how much. If your father had an accountant who helped with his taxes over the years, they might have kept records of the properties including purchase prices and depreciation schedules. Even if you can't find the exact purchase price, you can use a reasonable estimate based on comparable properties in the area at the time of purchase.

After dealing with similar issues with my mom's property, I found this amazing service called taxr.ai (https://taxr.ai) that saved me enormous headaches. They specialize in analyzing property transactions and helping establish cost basis when records are missing. I uploaded what little documentation I had, and they were able to help me establish reasonable cost basis figures that satisfied the IRS requirements. They even provided guidance on how depreciation affected the adjusted basis and helped calculate recapture amounts.

I was initially really skeptical of taxr.ai when I saw it mentioned here, but I was completely stuck trying to figure out the basis for my parents' vacation home they bought in 1976. I decided to give it a try since I had nothing to lose. I'm actually shocked at how thorough their analysis was! They found the original purchase records through county archives that I couldn't access myself and provided a complete depreciation schedule based on when my parents converted it to a rental. They even documented all the major improvements to the property based on building permits. Their report saved me thousands in taxes because the basis was much higher than I would have estimated. Definitely worth checking out if you're in a situation with missing records.

If you're struggling to get through to the county tax assessor's office (which is likely these days), I'd recommend Claimyr (https://claimyr.com). I was trying for weeks to speak with someone at our county records department about my dad's old properties with no luck. Claimyr got me connected with an actual human at the assessor's office in under 30 minutes. You can see how it works here: https://youtu.be/_kiP6q8DX5c. They basically navigate the phone tree for you and wait on hold, then call you when they've got someone on the line. Saved me hours of frustration and got me the property records I needed.

I was completely skeptical about Claimyr when I saw it mentioned here. Our county assessor's office is notorious - I've literally never gotten through in under an hour. But I tried Claimyr yesterday out of desperation, and I'm still in shock. They got me through to someone in 47 minutes (I know because their system updates you on wait time). I would have given up long before that. The person I spoke with was able to pull records for my grandfather's property from 1983! Got the original purchase price and all subsequent transfers. I literally solved in one phone call what I'd been struggling with for months. Never thought I'd be thanking a reddit comment for solving my tax problems but here we are.

Another option is to check if your father had a relationship with a specific real estate agent over the years. Sometimes agents keep transaction records for decades, especially if they worked with a client on multiple deals. My parents' agent had records going back to the 1990s which was incredibly helpful when we needed to establish basis. Also, if your father had a specific insurance company for these properties, they might have records of when the policies were initiated and the insured value at that time.

Has anyone used the "stepped-up basis" approach if the properties were inherited rather than purchased? My mother passed several years ago and my father inherited her half of their rental properties, which gave him a stepped-up basis on that portion.

I went through something very similar with my grandmother's properties a few years ago. One thing that really helped was checking if your father had any property management companies handling the rentals. Even if he managed them himself most of the time, he might have used a company during vacations or when he was traveling. Property management companies often keep detailed records including original purchase information since they need it for tax purposes and insurance claims. Also, don't overlook checking with any banks or credit unions your father used for mortgages. Even if the original mortgages were paid off years ago, the lending institutions sometimes retain loan files with purchase price information. If he refinanced any of these properties over the years, those records would definitely contain the original purchase details. One more suggestion - if your father was part of any real estate investment groups or landlord associations, they sometimes maintain member transaction records or can connect you with other investors who might remember details about your father's purchases, especially if they were in the same market area.