I was gifted a PORTION of a property by my grandmother in 2016. She got it from my grandfather after he passed away in 2004. The property is outside the US and my grandmother has no ties to the US/ US taxes (never filed US taxes or claimed depreciation). The property was then rebuilt into apartments and I got one apartment (out of 6) in the property. The rest of the property at that time of rebuilding was owned by my dad and he got the rest of the apartments registered in his name (he also has nothing to do with the US/ US taxes or ever filed any depreciation on it). I started earning rental income in 2017.
I am a non-resident for tax for now and will become a resident for tax purposes in 2021 when I will need to report my rental income from the property on my Tax return. How do I calculate depreciation, my cost basis and in-service date on the property? The apartment now is significantly less valuable than the original property when my grandmother inherited it (since it is now split into 6). So should my cost basis be the FMV at the time of gifting or FMV at the time it was rebuilt and I got 1/6th of the property in my name or will it be the cost basis of the property at the time my grandmother inherited it? Also what will be my in-service date?
Normally, this would be doable and we'd be able to help. However, since you are not a U.S. citizen or resident alien for tax purposes, that complicates matters beyond the scope of this form. Besides, as a non-resident in 2020 for tax purposes, you can't use TurboTax anyway. That's because you'll have to file a 1040-NR non-resident tax return for 2020. TurboTax does not include or support that form at all. Therefore you need to seek legal advice *and* tax help/advice from a professional well versed in international tax treaties, and if possible one that is more familiar with the tax treaty between the U.S. and whatever country you are currently a resident of "for tax purposes" and the country where the property is located, if different.
This "will" be complicated. So you're doing the right thing by starting the learning process now, instead of waiting until the last minute at tax filing time. So get on it and start searching for a real tax pro that can help you. Don't settle on the first one you find either. You have time. So shop around.