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Depreciation on inherited rental house

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    Depreciation on inherited rental house

    My customers have been two elderly sisters. They have lived together in a home the jointly own.
    They also jointly own (50/50) a single family rental house. Have been filing an "E" for each.
    The older sister has recently died - leaving her 1/2 of the rental house to her sister.
    As I understand it, filing the deceased's final 1040 return will include the rental's regular depreciation on her "E" up to her date of death.
    My question is how to handle depreciation on the inherited side (i.e. the step up) of the rental for the surviving sister.
    Will the house depreciation be the survivor's regular 1/2 + a new starting point and amount of the inherited 1/2, based on FMV at death ?
    Thanks for comments.

    #2
    Yes . You are correct.

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      #3
      Yes. In my software, I would start a second line, noting Inherited. Don't forget the land. Even though you won't be depreciating the land, you'll probably want to carry a line for the inherited value of that half of the land.

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        #4
        When entering the inherited 'half', be sure to use the Date of Death as the "placed in service" date for that half.

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