Depreciation after Death when not done immediately

Forum|Forum|2 years ago
November 5, 2023
2 replies
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My husband died in Aug 2019. Our original depreciation on the rental properties ended halfway through that year. I had a step-up value done when he died. I didn't claim new depreciation but have since learned that I should have. I want to begin it for the 2023 tax year but I don't know how to do it. I've used Turbo Tax for about 20 years. Will I get in trouble with the IRS if I start depreciating again this late? Any information as to what I should do and how I should do it would be greatly appreciated. Thank you.

Anonymous_

Employee

If I am understanding your scenario correctly, then the following post by @AmeliesUncle contains your answer.

Solved: My wife died in 2022. In Turbotax, how can I Step Up the cost base of our rental property to get more depreciation? Can I update the original Cost to reflect the Step Up? (intuit.com)

Opus 17

Employee

You probably need an accountant or tax professional to help you.

Assuming you correctly identified the new cost basis of the properties in 2019, you should have taken depreciation on your 2019-2022 tax returns. Failing to do this creates two problems:

1. To get the benefit of the prior depreciation you forgot to claim, you will probably need to fill out form 3115. This is complicate and usually requires professional help. @Critter-3

2. To file correctly in 2023, you can't just start from scratch. You need to know what your depreciation should be as if you placed the properties in service in 2019 and depreciated them all along. That will probably also require professional help.

Anonymous_

Employee

@lserna

This raises a question as to whether you did not take any depreciation deductions at all on the properties, miscalculated your basis, or did not input your husband's one-half (that you acquired as a result his passing in 2019).

If you ceased taking all depreciation deductions on the properties in the 2019 tax year, you would need to prepare and submit Form 3115, which typically requires professional guidance (which you may want to seek out, regardless).