FMV vs Basis for rental property received in like kind exchange

Forum|Forum|5 years ago
June 30, 2020
1 reply
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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

ProConnect Tax Online

This topic has been closed for replies.

Best answer by sjrcpa

Basis of new property = adjusted basis of old property plus any additional amounts paid to acquire it.

sjrcpaAnswer

Level 15

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.

T

TaxGuyBill

Level 15

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.

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