Installment Sale

[ErikaF]

I need to know how to treat an inherited Installment Sale Contract.

In 2005, my husband and I, sold a jointly owned and fully depreciated 8-unit apartment house, under an installment contract.  We received monthly interest and principal payments.

My husband died in November 2018.  I' m the sole heir to my husbands share of the property.  This will be the first year I'm filing as single taxpayer. 

Will I need to reduce the contract price and depreciation by half to reflect the inheritance?  

Also, will only 1/2 of the principal and interest payments received be reported to the IRS as taxable income? 

Thanks for all the help you can give me!

[LeonardS]

No, you will not reduce the contract price or adjust the depreciation of the property. The fact that you are filing single this year for the first time does not effect on the contract price or depreciation of the property.  You will report all of the interest payments on your tax return. 

[ErikaF]

Do I also report the the full amount of the principal amount?

[ColeenD3]

Every amount previously listed stays the same.

[ErikaF]

You did not answer my question

[ColeenD3]

The principal stays the same. You previously owned one half and then inherited one half.