I have a question that I need help with. Father dies in 2016 leaves his house in trust to his wife in a life estate, upon her death house goes to his son.Wife lives in home pays all mortgages and collects rent on a cottage on property.Wife dies in 2020Son Sells home in 2020 Is the cost basis DOD of the Father in 2016, or DOD of the life tenant in 2020? Does the son need to recapture any of the depreciation from the rental of the life tenant?

M

Mhaj

Level 1

Question

Sale is inherited home with life estate

Forum|Forum|5 years ago
June 3, 2021
1 reply
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I have a question that I need help with.

Father dies in 2016 leaves his house in trust to his wife in a life estate, upon her death house goes to his son.
Wife lives in home pays all mortgages and collects rent on a cottage on property.
Wife dies in 2020
Son Sells home in 2020

Is the cost basis DOD of the Father in 2016, or DOD of the life tenant in 2020?

Does the son need to recapture any of the depreciation from the rental of the life tenant?

Lacerte Tax

This topic has been closed for replies.

P

PKCPAMST

Level 6

Because of the application of uniform basis, under the relevant IRC sections and the related regs., the life tenant -mother’s - adjusted basis for the house becomes the remainderman - son’s - basis for depreciation.

Mother’s adjusted basis equals FMV of the property at the date of the decedent’s death, plus improvements made by the life tenant, less depreciation allowed or allowable while the property was held by the life tenant.

Son’s adjusted basis for computing his gain on the sale of house will equal to mother’s adjusted basis, plus improvements made by son, less depreciation allowed or allowable while the property was held by son.

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