Both myself and wife are going to file US Tax for the first time as RESIDENT alien after getting our Green card for full year 2009 as joint.

We both are Resident aliens residing and working abroad and we jointly own a rental property which was purchased in 2007 and was put on rent in the same year i.e. prior to our taking the US residency. When do we need to establish and report the COST basis i.e. when we file our first return in 2009 or when we sell it in future? Do we have optional methods as under to establish its COST BASIS :
1) The place where the property is located is a Tax free country and generally there is little or no paperwork maintained. I have a purchase agreement from the builder which shows a low price ( 500,000) whereas the FMV at the time of purchase was 750,000 and now it is 850,000. Initially I incurred middleman cash payment of 250,000 for which there is no paper evidence. So if I declare 750,000 as the cost basis, would it be considered reasonable and acceptable?
2) Or, do I have an option to take current FMV which is 850,000 as Cost basis.
3) Also for the purchase of this property I took bank and other Loan of 500,000. Can I add the interest paid during last 2 years i.e. 70,000 to the Cost BASIS ?
I amtotally confused . Please give me a general guidance.