Stepped up cost basis on inherited house: gift bases vs. date of death basis?

[jesdq1]

Regarding the stepped up basis of inherited property or gift:  Warranty deed dated August, 2008 quit claimed the house from mother to mother and son. Warranty deed also gave mother unrestricted right to sell, gift lease... for the mothers lifetime.  Then upon her death property then conveyed to son.  Mother died Nov 1, 2020.  My question is this:  was the house gifted to the son (august,2008) or can I take date of death stepped up basis?  I am thinking that the clause in the warranty deed where the mother maintains complete control over the house allows the DOD stepped up basis ( because the son did not have a right the house until death ) ?

[Camp1040 · Accepted solution]

Was a life estate drawn up between mother and son? Sounds like the basic are in the warranty deed, but son should be identified as the remainderman and the mother is the life tenant, if it is a life estate arrangement then the remainderman (son) would get stepped up basis.

[TaxGuyBill]

That sounds like a "Life Estate", rather than a "Gift".  As such, it receives the Step-Up in Basis.

[jesdq1]

thank you

[jesdq1]

thank you!

[luv2rideaz3]

I have a similar question about an inheritance of house. My moms house was in their family trust and I was the beneficiary of the house according to the trust. I used the house as a rental from Aug.2011 to March 2021 and ran the rental “business” with the house still in the trust. I am also the trustee of my parents family trust. I have done tax returns for the trust for the rental income. In March of 2021 I paid off the mortgage on the home then transferred the property to myself with a quit claim from trust to myself and recorded with county. In July I sold the home which is now in my name. I know I have to claim the capital gain and got a 1099s to report sale price. My question is for the basis of the value of home to deduct from sales price. Would it be the FMV in 2011 when my mom passed, or the FMV in March 2021 when the house legally became mine? Transferred from trust to myself. Thank you

[sjrcpa]

What basis was used for depreciation while it was a rental?

[luv2rideaz3]

The amount used for depreciation was 25,400 . This was what I spent refurbishing the home to rent. The FMV of the home wasn’t used. Was claiming about 897 a year on the trust taxes for depreciation, from 2011 to 2021

[qbteachmt]

@luv2rideaz3 

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