How do you dispose of a rental property if the owner gave it to someone without an exchange of money? The property has already been depreciated.

Forum|Forum|3 years ago
March 17, 2023
3 replies
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Best answer by IRonMaN

For a gift, the basis is the basis of the person making the gift which you said was fully depreciated so the basis would be zero except for whatever the land cost was that hopefully was broken out when the asset was first depreciated.

IRonMaN

Level 15

That kinda depends. Did he give it to a family member or did he give it in exchange for something else?

Slava Ukraini!

C

chiodoincAuthor

Level 5

He gave it to a friend. He is an elderly gentleman and the individual has been a long time friend so he just gave it to him

IRonMaN

Level 15

Then just delete it off the tax return. There is nothing to report for income tax purposes.

Slava Ukraini!

C

chiodoincAuthor

Level 5

Thank you. Just to add to the matter, if the new owner wanted to rent it out, how do you determine the cost basis for depreciation or would there be no cost basis since he didn't pay anything for the property?

IRonMaNAnswer

Level 15

For a gift, the basis is the basis of the person making the gift which you said was fully depreciated so the basis would be zero except for whatever the land cost was that hopefully was broken out when the asset was first depreciated.

Slava Ukraini!

BobKamman

Level 15

Others with more badges than I have can assume there was no mortgage on the property. I'm just going to point out that if there was, it would be considered a sale for what's owed on it.

IRonMaN

Level 15

But some of us have been going to mind reading school for a number of years and when we see "elderly" and "gave away" in the same post, we are pretty confident that there was no mortgage. But none of us have ever gotten a 100% on our mind reading tests, so our mind reading skills aren't perfect.

Slava Ukraini!

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