topic Gift of foreign rental property - adjusted basis and depreciation in Investors & landlords

Gift of foreign rental property - adjusted basis and depreciation

TGTaxfiler — Tue, 10 Mar 2026 06:38:22 GMT

I received as a gift a rental property in another country. I know I need to report it on Forum 3250. I also know that I need to report rental income on Schedule E. The question is, what is the basis for depreciation.

Let’s say the original purchase price 20 years ago was $100,000 + $20,000 for land.

Based on my research, the tax authorities in the country where the property (and original owner) is allow a depreciation of 2% annually over 50 years. I believe (need to confirm with old records) that this happened, so $2,000 were depreciated each year for 20 years.

If the depreciation happened, is it correct that my adjusted basis is $100,000 - ($2,000 * 20) = $60,000?

And do I then just depreciate those $60,000 over 30 years, or do the 20 years of foreign depreciation reduce the length of time for me?

Also, if I cannot confirm that the depreciation happened abroad, do I then use the original purchase price as basis?

Re: Gift of foreign rental property - adjusted basis and depreciation

Carl — Mon, 03 Oct 2022 13:49:04 GMT

For U.S. tax purposes, foreign depreciation does not figure into this at all. Your cost basis is the *lesser* of what the giver originally paid for the property plus any property improvements, or the FMV at the time *you* placed the property in service. I doubt the property is worth less than the giver originally paid for it. So I would expect your cost basis to be the giver's cost basis.

Foreign rental property placed in service in 2018 or after is depreciated over 30 years. The TTX program can handle that just fine.

Re: Gift of foreign rental property - adjusted basis and depreciation

TGTaxfiler — Mon, 03 Oct 2022 16:37:53 GMT

Thank you. That presumably makes it a bit easier.