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I should know this, but. Client rented out part of her home. She died, and her estate sold the property.
I have the date of death appraisal. I am splitting the sale, but I need to know whether or not the depreciation claimed during the rental still needs to be recaptured. I think not, but still want your thoughts.
TIA.
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No. Estate gets a fresh start.
The more I know the more I don’t know.
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Why are you splitting the sale? Was the rental continued after her death?
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Thanks, and yes, the rental continued after her death, but there was no more depreciation. Asset was completely written off.
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Doesn't depreciation start all over again after the property is inherited?
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Yes it does.
The more I know the more I don’t know.
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I'm (mistakenly?) under the impression that the sale was in the same year as the death. I think for short-lived assets (appliances, furniture, etc.) there's no depreciation if placed in service and sold in the same year. I seem to recall someone telling me that the rule is different for real property because of the mid-month convention but I've never had to look it up. So you might have a few months of depreciation on the rental activity that then gets treated as Unrecaptured 1250 gain but I can't imagine it will be too much.
Edit: A quick look in Pub 946, page 6, second column (2019) says this:
you cannot depreciate the following property.
• Property placed in service and disposed of in the same year
https://www.irs.gov/pub/irs-pdf/p946.pdf
