@M-MTax Hi. I will try and find a professional but want to learn how it works if possible.
It had already been a rental, 10 years prior to the transfer and has remained a rental since I became the owner.
Would l use the appraised figure to calculate which portion is attributed to structure vs land, and then carry over the depreciation schedule for the structure of 15 years and continue as if the 16th year on my return?
example: To figure out what portion is structure and what is land, I would use the appraised value and apply this new % to my new basis. i.e. if appraisor said land was 80% and structure was 20%, I apply 20% to my adjusted cost basis.
Reg: 1.1015-4 isn't crystal clear on this.
Next, cpa wrote to us I should use (example figure) 500K as basis on my return. (400K gifted to me and 100K I paid)
Below is how mom's gift tax return was filed:
Total cost basis before adjustment: 600K
Accumulated depreciation : -100K
How much I paid: -100K
Cost basis on mother's gift tax return: 600K-100K-100K=400K
Applying the % from my reply above:
500K*20%=100,000 for structure and the rest is land.
since i'm on my 11th year, I would depreciate as if there is 27.5-15=12.5 years left
100,000/12.5=$8000
depreciation on structure every year for 12.5 more years
am I on the right path?
