Depreciation basis

[1942Coot]

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.

[tagteam]

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@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.

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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.