Rental Cost Basis for inherited property

Forum|Forum|1 year ago
February 18, 2025
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I inherited a rental property. I had the property appraised as of my mother's date of death. For depreciation purposes the depreciable part should be fair market value less the land cost, correct?

The appraisal had one figure and it did not allocate between land and house. Can I use the Property Assessor's Office ratio to value the rental asset? For, example land represents 40% of the assessed land and 60% for improvements (rental house).

Best answer by DianeW777

Yes, inherited property provides the stepped up basis as cost basis for the beneficiary based on the fair market value (FMV) on the date of death. The tax assessment can be a great way to arrive at the percentage for land and rental house. In your example it seems the land value may be high so be sure to use the actual city or county tax assessments.

You can use the link below to enter your rental property activity.

Where do I enter income and expenses from a rental property?

@wgloriag2

M-MTax

You are correct re using the FMV of the depreciable property for depreciation purposes.

You can also use the percentage split for that purpose.

DianeW777Answer

You can use the link below to enter your rental property activity.

Where do I enter income and expenses from a rental property?

@wgloriag2

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wgloriag2Author

Thank you for replying. Yes, I used the parcel number for the rental to obtain the County Assessors Office data. In California, land is generally high. On my personal residence the ratio is even higher and I have less land than the rental which sits is 3/4 acre.

Thank you for taking time to respond so promptly.