- Mark as New
- Bookmark
- Subscribe
- Permalink
- Report Inappropriate Content
client received rental property in like kind exchange and I am setting up the depreciation. There is a FMV of $759,000 and a Basis of $219,232 with a deferred gain of $539,768
what do I use for the cost? And what do I do about the deferred gain? There is also land value that I will need to make an adjustment for as well.
Any help is greatly appreciated
Pattie Clary
Best Answer Click here
- Mark as New
- Bookmark
- Subscribe
- Permalink
- Report Inappropriate Content
Basis of new property = adjusted basis of old property plus any additional amounts paid to acquire it.
The more I know the more I don’t know.
- Mark as New
- Bookmark
- Subscribe
- Permalink
- Report Inappropriate Content
If I remember correctly, the 'default' way is to depreciate the newly acquired Basis (the additional amount paid for the new property) AND continue depreciating the old property (the Basis which is transferring to the new property).
You can make an election to start the entire depreciation anew using the new Basis (see Susan's comment above), but the probably results in lower depreciation.
- Mark as New
- Bookmark
- Subscribe
- Permalink
- Report Inappropriate Content
Thanks for the reply! What about the deferred gain? What happens to that amount?
- Mark as New
- Bookmark
- Subscribe
- Permalink
- Report Inappropriate Content
It's deferred until the property is sold. Deferring was the point of the like kind exchange.
The more I know the more I don’t know.
