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Old 12-14-2014, 08:00 PM
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Post inherited home

i inherited a duplex which was half rental and half personal. i see on site the basis for sale is the new valuation from fmv or appraisal stepped up basis. i am selling hopefully immediately but until estate is settled i will receive some rental income from the current tenant who has a lease. what happens to the depreciation from the house that was taken by the decedent but not recaptured because of death. and if i sell relatively quickly do i pay long or short term capital gains and am i taking depreciation during the time it takes to sell. if so is that new depreciation on the inherited value.

thank you.



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Old 12-15-2014, 08:51 PM
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i inherited a duplex which was half rental and half personal. i see on site the basis for sale is the new valuation from fmv or appraisal stepped up basis.=====>>>>>>>> In general, the basis of inherited property is the FMV of that property on the date of death. This may be a step-up (the most common case) or a step-down. Depreciation claimed prior to the date of death is not a factor. Any depreciation claimed after the date of death must be considered. So it's possible for there to be a small amount of unrecaputred depre involved. aslongas you inherited property from a decedent who died before/ after 2010, your basis in property you inherit from a decedent is ;The FMV of the property at the date of the decedent's death or The FMV on the alternate valuation date if the personal representative for the estate elects to use alternate valuation. income tax is completely avoided on the appreciation in value that occurred while they owned the property. If you inherited property from a decedent who died in 2010, special rules may apply; Heirs of individuals who die in 2010 may get a full stepped-up basis, only a partial step-up in basis, or a carryover basis depending on whether the executor made a special election to avoid estate tax for the estate.

i am selling hopefully immediately but until estate is settled i will receive some rental income from the current tenant who has a lease. what happens to the depreciation from the house that was taken by the decedent but not recaptured because of death.==>as mentioned above. Depreciation claimed before the date of death is not a factor. Any depreciation claimed after the date of death is an issue; you on the disposition of the duplex, need to recapture the unrecaptured depre taxed as ordinary income at 25% aslongas your tax bracket is 25% or higher.
and if i sell relatively quickly do i pay long or short term capital gains and am i taking depreciation during the time it takes to sell.=====>>gain or loss from the sale of inherited pty is always long term. So I guess your gain/loss ‘d be either long term gain or long term loss.

if so is that new depreciation on the inherited value.===>> When a piece of property is inherited, it starts fresh with a new basis and new depreciation. The prior depreciation is simply gone with no recapture. When a taxpayer dies, no gain is reported on depreciable real property transferred to his or her estate or beneficiary. However, if the decedent disposed of the property while alive and, because of his or her method of accounting or for any other reason, the gain from the disposition is reportable by the estate or beneficiary, it must be reported in the same way the decedent would have had to report it if he or she were still alive. Ordinary income due to depreciation must be reported on a transfer from an executor to an heir, beneficiary, or other individual if the transfer is a sale or exchange on which gain is realized.For example, you owned depreciable rental property that, upon your death, was inherited by your son. No ordinary income from depreciation is reportable on the transfer, even though the value used for estate tax purposes is more than the adjusted basis of the property to you when you died. However, if you sold the property before ypour death and realized a gain and if, because of your method of accounting, the proceeds from the sale are income in respect of a decedent reportable by your son, he must report ordinary income from depreciation.



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