Basis for rental house sold after one spouse dies.

Forum|Forum|3 years ago
February 8, 2023
2 replies
26 views

Rental home was bought in June 1999 for $135k. One spouse died in 2021 when the house was appraised for $515k. The home was sold on March 2022 for $520k. Just on those figures alone, what would be their basis? Thanks for any help.

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Best answer by JOFI

The last phrase in your response is confusing.

The stepped up basis (assuming no improvements were made at any time) should be $325,000 in this case.

T

taxes96786

Level 8

1/2 of purchase price plus improvements during time owned, plus1/2 of FMV on date of death of spouse, plus difference in that full FMV and FMV on date of sale.

J

JOFI

Answer

Intuit Community Champion

The last phrase in your response is confusing.

The stepped up basis (assuming no improvements were made at any time) should be $325,000 in this case.

T

taxes96786

Level 8

Her basis is 1/2 of purchase price plus 1/2 of FMV on date spouse's death. Depreciation for the rental time only is for the residence, not the land, so that is not included in basis. Depreciation is a separate calculation done once current full basis is determined.

Is that clearer?

rbynaker

Level 13

Not enough information was provided to answer the question (and yet you somehow got two answers already). The two big things that jump out as omitted:

1) Are you in a community property state?

2) What about depreciation allowed or allowable?

Rick