Hi Ronnie,
Generally, when inheriting property, there is a step-up in cost basis to the fair market value of the property on the date of the decedent's death. In this scenario, since you have inherited half of the property, that half receives the step-up in cost basis.
For example, if the original property basis (what was paid for the property, plus any improvements and less any depreciation) was 200,000, and you owned the property jointly, the basis would generally be allocated 50/50 between you and your spouse (100,000 each).
On the date of death, the half of the basis allocated to the joint owner who passed away "steps-up" in cost basis to the fair market value of the property as of that date. So, following the example, if the property is worth 400,000 on the date of death, the half of basis the was inherited would "step-up" to 200,000, from the 100,000 noted above, giving a new overall basis of 300,000 (200,000 of the stepped-up inherited portion, and 100,000 from the original owned half).
For documentation/basis determination, you would need to determine the fair market value of the property as of the date of death (in this case July 2021).
Some guidance on this by Expert @RachelW is located here:
The "fair market value" is the amount a willing buyer would pay and a willing seller would accept when neither is compelled to buy or sell, in an "arm's length" transaction.
You can get an idea of the fair market value of your home by using a combination of these options:
- Using the assessed value on your annual property tax bill
- Using the value on your Homeowner's Insurance policy
- Getting an estimate from a realtor
- Check out Zillow.com as a comparison tool with the above options. It is not always the most accurate, but gives you a quick reference point.
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