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Step-Up Basis On Income Property When 1 Spouse Dies

Discussion in 'Estate Planning, Creating Wills & Trusts' started by Allan Burnham, Apr 7, 2020.

  1. Allan Burnham

    Allan Burnham Law Topic Starter New Member

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    My Mom & Dad own a residential rental property. They had fully depreciated it over 27.5 years. The property is included in their living trust but Title was never changed to the Trusts name. County records still show my Mom & Dads name on Title. My Dad died about 1 year ago. The question is can the basis be stepped up to the value at the time of Dads death? If so can my Mom start the depreciation again for 27.5 additional years on the stepped up basis?

    Thanks, Allan
     
  2. army judge

    army judge Super Moderator

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    You will receive accurate and appropriate information ONLY if you engage a CPA or tax attorney that you have vetted and paid.
     
  3. Allan Burnham

    Allan Burnham Law Topic Starter New Member

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  4. adjusterjack

    adjusterjack Super Moderator

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    Then it's not included in their living trust.

    I doubt it but you would be wise to consult a tax pro.
     
  5. Tax Counsel

    Tax Counsel Well-Known Member

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    Assuming the home was community property at the time he died then the basis in the property is now the fair market value (FMV) of the home at the time of his death.

    But she cannot take a second round of depreciation on the structure.
     
  6. welkin

    welkin Active Member

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    But she can depreciate any improvements that were made to the structure. But that should have happened in the 27.5 years and those deprecation accounts would be ongoing. Such as a new roof or kitchen.
     
  7. zddoodah

    zddoodah Well-Known Member

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    Why did they fail to change the title?

    Not really accurate.
     
  8. adjusterjack

    adjusterjack Super Moderator

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    Okay.

    Then it's not included in their living trust unless a court says so.

    Satisfied?
     
  9. Tax Counsel

    Tax Counsel Well-Known Member

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    But again, just so the OP is clear on this, depreciation is only taken once on that stuff. The basis step up doesn't allow you to start the depreciation all over again, whether on the original structure or on the improvements made.
     
  10. Allan Burnham

    Allan Burnham Law Topic Starter New Member

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    Thank you so much! That pretty well tells me what to do. No 2nd round of depreciation and talk to Title Company on how to change Title into Trust name. Don't want to wait for a judge to make that determination.
    Again, thank you for your time.
     

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