Rental Property willed to Daughter

[Yardley CPA]

Taxpayer passed away in May, 2016.  She owned a rental property that she willed to her daughter.  The property was fully depreciated through the years.  Daughter will continue to rent the property.  Is she able to depreciate the Fair Market Value of the rental property now that it was willed to her?

[jklcpa]

Yes, in the daughter's case, she will start over depreciating the property from the date of the inheritance and using the FMV at DOD as the total basis. From there, split out the value of the land from the structure and begin depreciating it.

There are more complications when a person takes over the second 1/2 of a rental from a deceased spouse, and there are also differing rules depending on whether in a community property state, but you don't have any of that. Just mentioning for anyone reading in future.

I'm having trouble with the link a pdf from a gov't website on my tablet right now, but here is a link to a previous topic with the same discussion on here if you need the reference:

 

[Yardley CPA]

Thank you, JKL

[michaelmars]

don't forget to allocate part of the fmv to land.  and now would be the perfect time for a cost seg.