Solved: I inherited rental house. Deen in my name and mortgage in deceased Mother's name. Can I depreciate if not on mortgage?
cancel
Showing results for 
Search instead for 
Did you mean: 
Highlighted
New Member

I inherited rental house. Deen in my name and mortgage in deceased Mother's name. Can I depreciate if not on mortgage?

 
1 Best answer

Accepted Solutions
Highlighted
Level 15

I inherited rental house. Deen in my name and mortgage in deceased Mother's name. Can I depreciate if not on mortgage?

Rental Property Dates & Numbers That Matter.

Date of Conversion - If this was your primary residence before, then this date is the day AFTER  you moved out.
In Service Date - This is the date a renter "could" have moved in. Usually, this date is the day you put the FOR RENT sign in the front yard.
Number of days Rented - the day count for this starts from the first day a renter "could" have moved in. That should be your "in service" date if you were asked for that. vacant periods between renters count also PROVIDED you did not live in the house for one single day during said period of vacancy.
Days of Personal Use - This number will be a big fat ZERO. Read the screen. It's asking for the number of days you lived in the property AFTER you converted it to a rental. I seriously doubt (though it is possible) that you lived in the house (or space, if renting a part of your home) as your primary residence or 2nd home, after you converted it to a rental.
Business Use Percentage. 100%. I'll put that in words so there's no doubt I didn't make a typo here. One Hundred Percent. After you converted this property or space to rental use, it was one hundred percent business use. What you used it for prior to the date of conversion doesn't count.

RENTAL POPERTY ASSETS, MAINTENANCE/CLEANING/REPAIRS DEFINED

Property Improvement.

Property improvements are expenses you incur that add value to the property. Expenses for this are entered in the Assets/Depreciation section and depreciated over time. Property improvements can be done at any time after your initial purchase of the property. It does not matter if it was your residence or a rental at the time of the improvement. It still adds value to the property.

To be classified as a property improvement, two criteria must be met:

1) The improvement must become "a material part of" the property. For example, remodeling the bathroom, new cabinets or appliances in the kitchen. New carpet. Replacing that old Central Air unit.

2) The improvement must add "real" value to the property. In other words, when  the property is appraised by a qualified, certified, licensed property appraiser, he will appraise it at a higher value, than he would have without the improvements.

Cleaning & Maintenance

Those expenses incurred to maintain the rental property and it's assets in the useable condition the property and/or asset was designed and intended for. Routine cleaning and maintenance expenses are only deductible if they are incurred while the property is classified as a rental. Cleaning and maintenance expenses incurred in the process of preparing the property for rent are not deductible.

Repair

Those expenses incurred to return the property or it's assets to the same useable condition they were in, prior to the event that caused the property or asset to be unusable. Repair expenses incurred are only deductible if incurred while the property is classified as a rental. Repair costs incurred in the process of preparing the property for rent are not deductible.

Additional clarifications: Painting a room does not qualify as a property improvement. While the paint does become “a material part of” the property, from the perspective of a property appraiser, it doesn’t add “real value” to the property.

However, when you do something like convert the garage into a 3rd bedroom for example, making a  2 bedroom house into a 3 bedroom house adds “real value”. Of course, when you convert the garage to a bedroom, you’re going to paint it. But you will include the cost of painting as a part of the property improvement – not an expense separate from it.


View solution in original post

4 Replies
Highlighted
Level 15

I inherited rental house. Deen in my name and mortgage in deceased Mother's name. Can I depreciate if not on mortgage?

Basically, the mortgage has nothing to do with the legal requirement to depreciate rental property. Even though you're not on the mortgage, you do have a vested interest in the property. Therefore you will claim mortgage interest and property taxes that *you* paid from the date of inheritance. Understand how this works for you so you don't get bit big time by the IRS years down the road here. I am assuming your mom passed in 2017.
Upon her passing the property should have been transferred to her estate. Then an estate return (IRS FORM 1041) would have been completed and included the rental property. All prior depreciation taken on the property would have been recaptured and taxed to the estate. Then estate, and NOT YOU would have paid any and all taxes due on the property, up to the date it was formally, officially and legally transferred to you in your name.
Your acquisition date of the property would be the date your name was put on the deed. If there was already a renter in the property at the time, then the in service date would be the same.
For the purposes of depreciation, your cost basis would be the FMV of the property on the date of your mom's passing, and NOT the date you inherited it.
Below in the answer box is more information that you will find informative, educational and helpful. If you have any questions or need further clarification on this rental stuff, please ask. I've been a landlord for 25 years and while I do learn something new every day, I do have lots of experience with rentals and am more than willing to share my knowledge.
Highlighted
New Member

I inherited rental house. Deen in my name and mortgage in deceased Mother's name. Can I depreciate if not on mortgage?

Carl. This is fantastic. Thank you!
Highlighted
Level 15

I inherited rental house. Deen in my name and mortgage in deceased Mother's name. Can I depreciate if not on mortgage?

I can't stress the importance of getting all your numbers, percentages and dates right the first year you have a rental property. Mistakes tend to exacerbate over time and if it's a few years before you catch that mistake, the correction can be $COSTLY$. So please, if in doubt about ANYTHING, ask! The only stupid question, is the one you don't ask. It's not like we learn this stuff through osmosis. I surely didn't and in my past have paid more than my fair share of what I call "stupid tax".
Highlighted
Level 15

I inherited rental house. Deen in my name and mortgage in deceased Mother's name. Can I depreciate if not on mortgage?

Rental Property Dates & Numbers That Matter.

Date of Conversion - If this was your primary residence before, then this date is the day AFTER  you moved out.
In Service Date - This is the date a renter "could" have moved in. Usually, this date is the day you put the FOR RENT sign in the front yard.
Number of days Rented - the day count for this starts from the first day a renter "could" have moved in. That should be your "in service" date if you were asked for that. vacant periods between renters count also PROVIDED you did not live in the house for one single day during said period of vacancy.
Days of Personal Use - This number will be a big fat ZERO. Read the screen. It's asking for the number of days you lived in the property AFTER you converted it to a rental. I seriously doubt (though it is possible) that you lived in the house (or space, if renting a part of your home) as your primary residence or 2nd home, after you converted it to a rental.
Business Use Percentage. 100%. I'll put that in words so there's no doubt I didn't make a typo here. One Hundred Percent. After you converted this property or space to rental use, it was one hundred percent business use. What you used it for prior to the date of conversion doesn't count.

RENTAL POPERTY ASSETS, MAINTENANCE/CLEANING/REPAIRS DEFINED

Property Improvement.

Property improvements are expenses you incur that add value to the property. Expenses for this are entered in the Assets/Depreciation section and depreciated over time. Property improvements can be done at any time after your initial purchase of the property. It does not matter if it was your residence or a rental at the time of the improvement. It still adds value to the property.

To be classified as a property improvement, two criteria must be met:

1) The improvement must become "a material part of" the property. For example, remodeling the bathroom, new cabinets or appliances in the kitchen. New carpet. Replacing that old Central Air unit.

2) The improvement must add "real" value to the property. In other words, when  the property is appraised by a qualified, certified, licensed property appraiser, he will appraise it at a higher value, than he would have without the improvements.

Cleaning & Maintenance

Those expenses incurred to maintain the rental property and it's assets in the useable condition the property and/or asset was designed and intended for. Routine cleaning and maintenance expenses are only deductible if they are incurred while the property is classified as a rental. Cleaning and maintenance expenses incurred in the process of preparing the property for rent are not deductible.

Repair

Those expenses incurred to return the property or it's assets to the same useable condition they were in, prior to the event that caused the property or asset to be unusable. Repair expenses incurred are only deductible if incurred while the property is classified as a rental. Repair costs incurred in the process of preparing the property for rent are not deductible.

Additional clarifications: Painting a room does not qualify as a property improvement. While the paint does become “a material part of” the property, from the perspective of a property appraiser, it doesn’t add “real value” to the property.

However, when you do something like convert the garage into a 3rd bedroom for example, making a  2 bedroom house into a 3 bedroom house adds “real value”. Of course, when you convert the garage to a bedroom, you’re going to paint it. But you will include the cost of painting as a part of the property improvement – not an expense separate from it.


View solution in original post

Privacy Settings