Selling Building

Today TaxMama hears from Oscar in Michigan who says, “I have a friend who wants to sell a commercial building that has been fully depreciated. She and her husband were co-owners of the building. Her husband died in 2001 when the building was appraised at $400,000.00. She is of the opinion that the appraised value would become the cost basis. But I think that only his share of the building would get the stepped up basis – that her half would still be zero. Am I correct? Or what would the cost basis be if she sold the building.”

Dear Oscar,

Is the tax professional still around who helped with her husband’s estate at the time of his death? Check with him about her basis.

How title was held in the property will determine whether the whole property gets a stepped up basis or just her husband’s half.

Either way, she would still have a basis in the property.

While you can fully depreciate a building – you do not depreciate the land.

The cost of the land will be her basis if she doesn’t get the full step up for her half. So, she has some digging to do.

She will need to check with someone to see if her half of the investment will qualify for the stepped up basis.
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