How do I handle this in turbo tax?
You'll enter it in the Assets/Depreciation section. Here's how it works.
Lets say you and your spouse purchased the property in 2010 and it's been a rental the entire time you two owned it. You paid $100,000 for the property with $30,000 allocated to the land.
So that's $70K for the structure and that's what is being depreciated.
Then the $30K for the land is not being depreciated.
So for the sake of simplicity lets say your spouse passed away on July 1, 2019. An appraisal on the house puts the current value at $150,000 with $45K on the land and the remaining $105K for the structure. Figure and write down the difference.
Total price paid was $100,000 and you got a $50,000 step-up in basis. That's a 50% increase of $50K.
TOtal allocated to land is $30K and stepped up to $45K. That's a 50% increase of $15K
Total allocated to structure is $70K stepped up to $105K. Thats a 50% increase of $35K
So in the assets/depreciation section of the program elect to "Add an Asset"
It gets classified as Residential Rental Real estate with an in-service date of the date your spouse passed away.
The total you'll enter in the COST box will be $50,000 and in the COST OF LAND box will be $15,000.
So in addition to the $70K that's already been depreciated a bit over the first 10 years you two owned the property together, now an additional $35K will be depreciated over the next 27.5 years with depreciation starting on the date your spouse passed away.
Does this help clear it up for you now? Any questions, then by all means please ask!
