Divorced, rental properties were awarded to me. How do I carry them over to my taxes? The already depreciated value (9years) or the current value of the home?

[dblack2438]

We filed jointly, (married) but the property was only in his name. I was deeded the property after the divorce.

[view2]

I.R.C. § 1041 provides that no gain or loss is recognized on a transfer of property from a spouse or a former spouse to a spouse or former spouse if the transfer is incident to a divorce.The parties cannot elect out of it. The section is applicable even if the spouse or former spouse pays consideration for the property by giving up rights, transferring other property, or paying cash.

The transferee former spouse takes the transferor's tax basis in the real property determined immediately before the gift, i.e., the tax basis is carried over for income tax purposes. This rule is applicable whether the fair market value of the real property transferred is less than, equal to, or greater than the transferor's adjusted tax basis in the property prior to the transfer.

 I.R.C. § 1041 provides that a transfer is incident to a divorce if (1) it occurs no more than one year after the date on which the marriage ceases, or (2) the transfer is related to cessation of the marriage.

Because the tax basis is transferred from one spouse to the other spouse, built-in gain recognized by the transferee spouse upon the disposition of the property is also transferred.

[lauriemariposa]

What is the tax basis if the house was in both spouses names, then after the divorce, one spouse is awarded the house.

[Carl]

What is the tax basis if the house was in both spouses names, then after the divorce, one spouse is awarded the house.

There is no change is tax basis, cost basis, or any other basis. The receiving spouse receives *everything*. The original cost basis, all depreciation, all carry over losses, *EVERYTHING*.

If you were reporting the rental on a joint tax return in the past, then absolutely nothing concerning the rental will change on your now filing single tax return. Not one single penny.

[cibucci]

I have understood, in a divorce and spouse 1 buys out spouse 2 from the marital home the basis for spouse 1 will be their original basis + any improvements. 

However, I thought I had read somewhere the basis becomes the original basis + 1/2 of the change in value used to determine buy-out. Is this misinformation?

I want to be clear. If the basis stays the original value I need to negotiate as this will mean capital gains for me in the future.

[ColeenD3]

You might be thinking of inheriting the spouse's half after death.

Internal Revenue Code section 1041 provides that a transfer between spouses, or former spouses, “incident to divorce” is not taxable in most circumstances. The transfer is treated like a gift. The transferee takes the transferor’s tax basis in the property. The effect of the rule is to defer the tax consequences (recognition of gain or loss) until the transferee disposes of the property.