STEPPED-UP BASIS APPLIES TO INHERITED RENTAL PROPERTY

DEAR BOB: You often mention inherited real estate and "stepped-up basis" to market value. I am 81 and plan to leave my rental condo to my stepson when I pass on. I have deducted about 10 years of depreciation on this property. If he sells it, will that depreciation be "recaptured" and taxed? --Mary W.

DEAR MARY: No. As I often say, death is the ultimate tax shelter. After you die and leave your rental condo to your stepson by will or in your living trust, he will receive a new "stepped-up basis" to market value on the date of your passing.

Uncle Sam will be grieving upon your death and he will forgive any depreciation recapture tax that you would have to pay if you sell that rental condo before you die. For more details, please consult your tax adviser.

(For more information on Bob Bruss publications, visit his
Real Estate Center).

Copyright 2006 Inman News