Rental Property

Forum|Forum|5 years ago
March 9, 2021
3 replies
11 views

I was a joint owner, with survivorship, of a home for over 10 years. The other owner lived in the home up until March of last year when he passed. In order for me to acquire the home, I had to evict individuals from the home and make repairs to the home for it to be rentable. Since I was already a joint owner, how do I handle this on my taxes pertaining to my ownership and acquisition of the rental? Also, can I use the date that I took possession of the home to repair the home on my taxes? Thank you.

DavidD66

Level 15

Your property's cost basis has three components:

First is your original cost basis as the Joint Owner. This is what you paid for the property. If it was a gift, your cost basis is basis of the person that gifted it to you. If you inherited it, it is the value on the date you inherited the property.
Next there is the basis in the half of the property you just inherited. It is 50% of the value of the property when the co-owner passed away.
The third part of your cost basis are your improvements to the property, and costs to make it rentable.

You will need to calculate your cost basis up front, so you can start depreciating your rental property.

TurboTax has a number of Help articles related to Rental Properties:

Where do I enter income and expenses from a rental property?

What kinds of rental property expenses can I deduct?

What is rental depreciation and how does it differ from an expense?

How do I handle capital improvements and depreciation for my rental?

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Princess77Author

Level 2

Should I use the date that I became part of the living trust as the cost basis or date that my grandfather passed leaving the property jointly for cost basis?

Repairs to the property (e.g., plumbling, fix windows, etc.) to make the property rentable are considered improvements versus repairs? Thank you.

ToddL99

Level 13

The work you had done (plumbing, windows) might be repairs or improvements - it depends on the extent and the cost of the work. For example, replacing all of the windows would have been an improvement, requiring depreciation. Plumbing work (repair leaks, replace fixtures) may be considered repairs, allowing an immediate write-off as an expense.

Use the date your grandfather passed away for calculating 50% of the cost basis of the property ,

As @DavidD66 stated, there are two initial elements of your cost basis -

First is your original cost basis as the Joint Owner. This is what you paid for the property. If it was a gift, your cost basis is basis of the person that gifted it to you at the time of the gift. If you inherited it, it is the value on the date you inherited the property.
Next there is the basis in the half of the property you just inherited. It is 50% of the value of the property when the co-owner passed away (the date your grandfather passed leaving the remaining 50% of the property to you)