Discussion:Basis & depreciation upon death
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Discussion Forum Index --> Tax Questions --> Basis & depreciation upon death
| 13 July 2006 | |
| Two fold question:
1) H & W own residential rental property. H passes away and W gets stepped up basis. What happens ro old basis and accumulated depreciation? Is it forgiven or carried forward? When sold is there recapture of any "old" deprerciation? 2) What happens when W dies-when the heirs get their stepped up basis, is all the previous depreciation forgiven and they start fresh with depreciation? What happens if heirs sell property immediately-any recapture? | |
| 13 July 2006 | |
| If I'm not mistaken, W will get stepped-up basis in H's 50% portion, and will begin depreciation anew at stepped-up basis. Transfer of property at death does not trigger recapture - in fact, recapture is not deferred and simply disappears. | |
| 13 July 2006 | |
| Assuming not community property, then H's 50% step up is correct. However, I think the FMV of H's half must be reduced by H's depreciation - not sure though. | |
| 13 July 2006 | |
| Assuming not CP and H died June 30th. Then six months depreciation would be taken as normal. The second six months would be treated like two assets for depreciation purposes. Depreciation computed at one half of the wifes adjusted basis first, and secondly, depreciation computed for six months on the H's stepped up basis. | |
| 13 July 2006 | |
| Yes, this is a community property state.
It seems that the second question has been answered-no recapture-just disappears. In my first question, the answer I am looking for is the recapture of depreciation after H passes and W sells. An example would be as follows: Original cost $100k-all building. Before H passes accumulated depreciation is $50k. Value at date of death is $200k. W adds $100k more in building to be depreciated. Depreciation on stepped up of $100k is $25k and another $25k for original basis. W sells for $300k. What is the amount of recapture, $100k or just the new $25K? Thank you for all the previous responses. | |
| 14 July 2006 | |
| Believe with community property W's new basis would be the FMV of the entire property at H's death - not just H's half. Think MSTguy's response could apply and W starts anew with basis of $200k. 1250 unrecaptured depreciation would apply on the sale for what W depreciated on the $200k. | |
