I received as a gift a rental property in another country. I know I need to report it on Forum 3250. I also know that I need to report rental income on Schedule E. The question is, what is the basis for depreciation.
Let’s say the original purchase price 20 years ago was $100,000 + $20,000 for land.
Based on my research, the tax authorities in the country where the property (and original owner) is allow a depreciation of 2% annually over 50 years. I believe (need to confirm with old records) that this happened, so $2,000 were depreciated each year for 20 years.
If the depreciation happened, is it correct that my adjusted basis is $100,000 - ($2,000 * 20) = $60,000?
And do I then just depreciate those $60,000 over 30 years, or do the 20 years of foreign depreciation reduce the length of time for me?
Also, if I cannot confirm that the depreciation happened abroad, do I then use the original purchase price as basis?
