Rental property in revocable trust after death of spouse in community property state.

My wife and I own several rental properties that we titled into a revocable trust with our two children as beneficiaries. We live in a community property state and the rentals are also in the same state. The rentals in the trust have been taxed under our joint return with no separate EIN#. When one of us passes will the other get a full stepped-up basis and wipe away depreciation just like if the rentals were not titled in a trust? If so, does the surviving spouse enter the date of death for taking the rentals out of service and start a new rental with the new higher depreciation amount on the same day or the following day?

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1 Best answer

Level 15

Apr 13, 2024 7:12:27 AM

Otherwise, there could be a full step up to fair market value with accumulated depreciation deductions disappearing.

This does, however, depend upon the terms of the trust.

Level 15

Apr 13, 2024 7:09:57 AM

@Learning every day wrote:

When one of us passes will the other get a full stepped-up basis and wipe away depreciation just like if the rentals were not titled in a trust?

That is generally what happens with respect to rental property held as community property in a community property state.

However, what actually occurs is dependent upon the terms of the trust.

Level 15

Apr 13, 2024 7:12:27 AM

Otherwise, there could be a full step up to fair market value with accumulated depreciation deductions disappearing.

This does, however, depend upon the terms of the trust.

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Rental property in revocable trust after death of spouse in community property state.