What happens to depreciation when rental property is inherited?
When a rental property is inherited, the depreciation schedule does not start over. The new owner continues to depreciate the property based on the original purchase price and remaining useful life of the property.
Related FAQs:
1. Can inherited rental property be depreciated?
Yes, inherited rental property can be depreciated by the new owner based on the original purchase price and remaining useful life of the property.
2. How is depreciation calculated on inherited rental property?
Depreciation on inherited rental property is calculated based on the original purchase price, the remaining useful life of the property, and the applicable depreciation method (straight-line or accelerated).
3. Can the depreciation schedule be reset when rental property is inherited?
No, the depreciation schedule does not reset when rental property is inherited. The new owner continues to depreciate the property based on the original purchase price.
4. What happens to accumulated depreciation when rental property is inherited?
The accumulated depreciation on inherited rental property is carried over to the new owner, who can continue to deduct it on their tax returns.
5. Is there a step-up in basis for inherited rental property?
Yes, inherited rental property receives a step-up in basis to the fair market value at the time of the previous owner’s death, which can affect the depreciation calculations.
6. Can inherited rental property be depreciated if it was previously fully depreciated?
If the inherited rental property was previously fully depreciated, the new owner cannot claim any further depreciation on the property.
7. What happens if inherited rental property has been depreciated beyond its fair market value?
If inherited rental property has been depreciated beyond its fair market value, the new owner may need to adjust the depreciation schedule to reflect the property’s actual value.
8. Can inherited rental property be depreciated if it was used as a primary residence by the deceased owner?
If the inherited rental property was used as a primary residence by the deceased owner, the new owner can still depreciate it as rental property based on the original purchase price.
9. What happens to depreciation if only a portion of rental property is inherited?
If only a portion of rental property is inherited, the new owner can depreciate that portion based on its fair market value at the time of inheritance.
10. Can inherited rental property be depreciated if it was part of a trust or estate?
If inherited rental property was part of a trust or estate, the new owner can still depreciate it based on the original purchase price and remaining useful life of the property.
11. Are there any tax implications for depreciating inherited rental property?
Depreciating inherited rental property can have tax implications, such as reducing taxable income and potentially lowering tax liability for the new owner.
12. Can inherited rental property be depreciated if it was acquired through a will or intestacy?
If inherited rental property was acquired through a will or intestacy, the new owner can depreciate it based on the original purchase price and remaining useful life of the property.