What happens to the accumulated depreciation of rental real estate owned by the decedent. Do the heirs receive a step up basis and the decedent's accumulated depreciation or do the heirs receive a set up basis with no accumulated depreciation?

ANSWER

The BIDaWIZ Team's Answer:

The general rule according to Internal Revenue Code Section 1014(a) is such that the beneficiary will receive a step-up in basis of the fair market value at the time of death. The accumulated depreciation prior to the decedent's death is irrelevant. Once the property has been inherited, the depreciation schedule would begin based on the new fair market value.