Rental Property Situation

[laur4555]

Hi all,
I have a client who has a residential rental property. As I was looking at 2005 for reference a couple of things stuck out that I am not sure of.

Rental property was previously owned by mom and given to TP upon death of mom in 2000. Previous to Mom's death, propertly had a QuickClaim on it since 1971 - Joint tenants and not joint tenants in common with client & mom. Taxes paid my Mom and in her name until dealth. From my research, the rental's basis should be the FMV at the date of death. The only year I can see any depreciation taken was in 2001 with a basis of $4,100. Hmmm Original cost of home back in 1965 was $10,600. I am at a total loss on this one.
1. Shouldn't basis be DOD?
2. Not sure if QuickClaim changes basis to be at time of purchase or DOD.

Any thoughts are very appreciated.

Laurie

[Bees Knees]

I’m not sure I follow the progression of ownership by the details you provided. If I understand your details correctly, your client was a joint tenant with Mom at the time of Mom’s death. Generally, a joint tenant gets a step up of one half the FMV at the time of the other joint tenant’s death. So your client would get his or her basis, plus one half of FMV upon inheriting Mom’s share at her death.

One exception to this is if your client did not pay any consideration for his or her joint tenancy interest in the property. If Mom originally gifted a joint interest to your client, then a gifted interest turns into an inheritance at the death of the giver. Thus, your client would get full step up of basis to FMV at the death of Mom.