figuring out cost basis - selling a rental
So my ex-wife bought a condo which was rented out the whole time, in 2005 for $375K. She passed away in 2015 and the property went to probate, and the county tax assessed value at that time was roughly $275K (there was a big drop in real estate in that area from 2008 which took forever to recover). By the time my son and I got awarded the house 4 years later, the county tax assessed value was roughly $370K. The probate papers as filed back in 2015 showed a market value of $325K and I'm going to guess that the market value of the house when I took possession in 2019-20 was roughly $400K (not sure how I would research that). The place was sold last week, so I guess I have a year to think about my taxes, but only a few more weeks to figure out what to do with the 1031 exchange if I decide to go thru with it. I guess I'm contemplating not going thru with this exchange even though I spent the fees to shove my monies into an escrow account.
The main questions 1) what should my cost basis be for the purchase of the property given that there should be a step-up situation (or in this case a step-down). 2) there is a straight-line 27-year depreciation I believe that I need to factor in. Should I be calculating step-up/down & depreciation from 2005, 2015, or 2019 against the cost basis? 3) Anything else I should consider?
