I have a client who co-owned property with a family member (50/50), and received full title after that family member's death. To compute the stepped up basis of the property for it's subsequent sale, I have adjusted only the inherited 50% basis per below. Does this make sense?
|Value when inherited||112,500||112,500||225,000|
|Home Basis For Sale|
|Stepped up basis||22,500||22,500|
|Basis after inheritance||90,000||112,500||202,500|
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I agree with the logic of your calculation. If there was any prior depreciation taken, I'd keep the two halves as separate assets, but that's a matter of personal preference. If the decedent had any passive activity losses suspended with respect to the property, there are sometimes some weird adjustments to basis, too.
Except that I believe in CA(and maybe other community property states) the inheritor gets a step up for 100%. Although that might only apply for married couples.