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My parents and I own a rental property. How will taxes be assessed when the property is transferred to me?

Posted by RealEstateSEO | Posted in Real Estate SEO | Posted on 10-06-2010

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2

Property
greg y asked:


The property is depreciated every year. After 27.5 years, the cost basis of the property is reduced to 0.

Since the IRS and California (where I reside) allow a gift transfer of 1 million dollars tax free, does that mean that if my parents give me this property, that I won’t have to pay depreciation recapture taxes? Sounds too good to be true.
Wouldn’t we be able to transfer this property down from one generation to the other w/o having to pay recapture taxes?

Comments (2)

v b said on 10-06-2010

Too good to be true.

If they gift the property to you, you get their basis *and* their 1250 gain (this is actually “unrecaptured” 1250 gain, recaptured depreciation is something else).

If they die and leave you the property and it’s not 2010, you get the step up and start over.
Brad said on 12-06-2010

You have to give respect, to earn it.

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