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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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Accepted Solutions

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

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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2 Replies

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


@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.

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

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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