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capital improvement from old times

Three years ago, I was gifted a mixed used property (first floor being one store front with second floor being one apartment) from my parents. It was a direct transfer/gift, I didn’t have to pay any tax and was told the property cost basis stay the same. Last year I sold the building. My parents had this property for 20 years and I only have it for 3 years. My question is can I claim all the capital improvement for the entire 23 years or just the 3 years? In other words, can the capital improvement done by my parent count to me to reduce capital gains?

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Accepted Solutions

capital improvement from old times

it's their basis - cost and accumulated depreciation. cost should have included any improvements prior to the gift. you get to add any you made. you are also responsible for depreciation recapture that was allowed or allowable during the period they owned it. here's a prior thread on the issue towards the end.

https://ttlc.intuit.com/community/investments-and-rental-properties/discussion/tax-on-giving-rental-... 

 

 

now if this has been messed up such as parents not taking depreciation on the improvements they made or perhaps a wrong assumption by you after they gifted it you probably should consult a tax pro. 

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2 Replies

capital improvement from old times

it's their basis - cost and accumulated depreciation. cost should have included any improvements prior to the gift. you get to add any you made. you are also responsible for depreciation recapture that was allowed or allowable during the period they owned it. here's a prior thread on the issue towards the end.

https://ttlc.intuit.com/community/investments-and-rental-properties/discussion/tax-on-giving-rental-... 

 

 

now if this has been messed up such as parents not taking depreciation on the improvements they made or perhaps a wrong assumption by you after they gifted it you probably should consult a tax pro. 

capital improvement from old times

Back in my dad's time, they used cash for many capital improvements. Suppose I use his number for cap improvement but don't have the documents; what is my audit risk?

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