Depreciation of Rental Properties - Deceased Spouse
Longtime client, husband and wife, MFJ. They have three rental properties (one of the properties began renting in 2014, the other two are at least 20 years old each). The wife passed away in April, 2016. For the 2016 return, do I split each of the rental properties into two assets, with the deceased wife's half receiving 50% step up basis, starting on the date of death? The husbands half would continue as is, with the cost basis and accumulated depreciation cut in half, correct?
Can yo
Terry has it correct. In a noncommunity property state, the husband would retain his basis that relates to his half, and then he gets the stepped up basis at 1/2 of the total FMV, and depreciation starts over from the beginning on the inherited portion. I think the code sec you are looking for here is 1.1250-3(b)(2), but check that for sure. I'm on my tablet right now and is not as easy to look up to verify.
As far as ATX, I don't know that there is any easy way to handle this. You'd have to
