All Forum Posts by: N Wong

Thank you for your responses. I will certainly depreciate the house.
However, I have yet another crinkle with respect to cost basis.
For some reason, my parents gifted the house to us (the 3 kids) about 5 yrs ago. Last year, we went ahead and regifted it back to them. So now, they are the owners again. My parents bought this house for $25k originally (crazy huh? =)). So my question is this... is their cost basis still $25k? (I will use 80/20 rule for structure/land value). My thoughts are that it should not really matter. Their income is so low that they will never fully take advantage of the depreciation. Also, they will probably rent this house out until they pass away and then leave it to us (in which case we will take it over at a cost basis of fair market value). Another question.. what are the tax implications if they do decide to sell soon? They will owe taxes on (FMV - cost basis of 25k) right? I hope the gifting and regifting does not cause too much trouble. thanks again for the insight!

I am doing taxes for my parents. They have a home that they bought 30+ yrs ago. In Jun 2011, they moved in with my brother and rented out their home for income. Besides social security, that is the only source of income they have. As a result of very low income, they are going to be in a situation where they probably will never owe any taxes (they will get all of it back). I think they will probably rent out the house until they pass away. So, should I go through the trouble of depreciating their home? Will there be any benefits to it later when they pass it onto me after their deaths? Any thoughts would be appreciated. thanks.