Mid-year transfer of rental property after divorce

Note that we don't have access to the divorce decree, which might affect what's suggested.  Best might be to consult with a tax pro. Both of you. The same pro so items are coordinated  

For the property she got from you, you would need to supply her with the depreciation you've taken and any suspended losses on the property. They are now hers. She would have to do the same for the property you got bcuase its now yours.

a) For property surrendered, you would take your normal depreciation prorated for the portion of the year you were married 

b) for the property you owned that was not surrendered you would take the depreciation for the full year

c) for the property you received you would enter her cost basis, but not the depreciation she took. This will need to be done next year so the proper depreciation is computed for this year. see below 

in other words if her cost was 275,000 and you were divorced for the last 200 days of 2025 you would expect her to take 275000/27.5*165/365 = ~ 4521

you would expect to get 275000/27.5*200/365 ~ 5479

for you to get the right deprection you would probably have to adjust business use to 200/365 =54.79% and f

Say she took 59583 in depreciation through 12/31/2024 + the 4521 for the first 165 days in 2025 total 64104. You enter this as prior depreciation with 100% business using the original acquisition date (proper)

TurboTax will compute your share of depreciation as 9356 (wrong) 

let say you now change business uses to 54.79%. TurboTax now comuted deprecition as 3840 (also wrong)

this is becuase there is no way to tell Turbotax that  4521 of depreecition was already taken for 2025

TurboTax's method of computing depreciation is to take cost 

1. General Rule for Property Transfers Between Spouses or Incident to Divorce
No Gain or Loss Recognized: When property is transferred between spouses or incident to divorce, no gain or loss is recognized for tax purposes. The recipient spouse generally takes the same basis in the property as the transferring spouse had before the transfer. This is referred to as a "carryover basis."
Relevant Regulation: IRC Section 1041 governs the treatment of property transfers between spouses or incident to divorce. It ensures that such transfers are treated as non-taxable events.
Source: 26 CFR § 1.1041-1T - Treatment of transfer of property between spouses or incident to divorce

2. Carryover Basis
Definition: The basis of the property in the hands of the recipient spouse is the same as it was in the hands of the transferring spouse. This means the recipient spouse inherits the original cost basis and any adjustments (e.g., depreciation or improvements) made by the transferring spouse.

this means that if the property was transferred pursuant to the divorce, no gain or loss is recognized, which is what I assume happened 

Your basis in the property you now own 100% is your original share of the cost and deprecition and her share of the cost and depreciation she took. Thus your cost for the rest of the year is 100% and prior year depreciation is 100% of all depreciation taken by both of you. 

the problm with TutboTax is properly computing what you should be entitled to in 2025 for depreciation. before the effective date of the divorce, nothing changes, but after that, I don't think TurboTax can provide a correct computation. You may have to override, which would require paper filing. 

You also take over any suspended losses she had on the property.

you alsoo get her suspended losses on