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Level 2

Depreciation basis

Upon the death of the owner of depreciating community property, when and what happens to it's basis? Does the new higher or lower basis (at date of death value) impose a new depreciation schedule calculation? If so, how is it calculated? Start date? Depreciation schedule options? Etc.
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Level 20

Depreciation basis


@1942Coot wrote:
Upon the death of the owner of depreciating community property, when and what happens to it's basis? Does the new higher or lower basis (at date of death value) impose a new depreciation schedule calculation? If so, how is it calculated? Start date? Depreciation schedule options? Etc.

Per Section 1014(b)(6), all of the community property acquired by a surviving spouse is treated as having been acquired from the deceased spouse if at least one-half of the community property is included in the estate of the deceased spouse.

 

As a result, the entire property gets a step up in basis to its fair market value on the date of death, prior accumulated depreciation is wiped out and a new recovery period (27.5 years for residential rental real estate) begins.