Question

Gift: Schedule E- Depreciation Transfer to new Owner in Middle of Year

Forum|Forum|3 years ago
March 3, 2023
1 reply
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Hello,

When a Schedule E is transferred to a new owner as a Gift and there is unused Depreciation left over because some assets have decades of life left, does the remaining Depreciation carryover to the New Owner?

What about if the Transfer happened in the middle of the year and there is 164 days for each owner, how do you split the Depreciation up between the two owners as the software does not seem to be smart enough to do something like that, even if I typed in when the asset was transferred or I state the property was rented out for 164 days, which is how much time it was under each ownership?

Thanks! 🙄

Not A Product Question

M

mglauner

If you have been reporting Rental Property, in the Property Profile you can indicate that you 'converted to Personal use' and a Date. This will stop Depreciation and give you an Accumulated Depreciation Amount and a depreciation amount for 2022 up to that date.

The new owner will set up the Rental Property Asset with a Cost Basis of the remaining undepreciated basis, as you suggest. When the 'date of service' is entered in Property Profile (which is the date the property was originally placed in service), TurboTax will continue calculating the depreciation. Indicate that the property was rented for 164 days in 2022.

Keep documentation of the FMV of the property as of date of gift, as it will be needed when property is sold.

You will need to file a Gift Tax Return separately, although no taxes will be due.

Here's more info on Rental Property as Gift.

V

VincentVanGhoulAuthor

Hi Marilyn,

Thanks for your detailed response! I agree with what you are saying, but in my case, it is Business Property, Section 1250 (Commercial Building, Non-Residential Real Estate) and I am not converting it to Personal Use.

Otherwise, what you are saying would work!!

Thanks for your answer as I think some of what you are saying is applicable, but I am not so sure on Section 1250 property.

TGIF!

~ Phill

A

Anonymous_

Employee

@VincentVanGhoul wrote:
....in my case, it is Business Property, Section 1250 (Commercial Building, Non-Residential Real Estate) and I am not converting it to Personal Use.

You indicate you are converting the property to personal use in the TurboTax program in order to stop depreciation of the property as of the date of the gift.