Basis of Co-Owned Property
In regard to co-owned property, the usual rules for basis of property apply, with the basis being split according to each owner’s individual investment in the property.
A surviving joint tenant in joint tenancy property applies the FMV at date of death rule to the deceased joint tenant’s share of the property. (Caution, this rule may not apply to some deaths in 2010.)
“ Example - Inheriting Property as Joint Tenant - Ramon and Al owned business property as joint tenants. Ramon had furnished 2/3 of the $30,000 purchase price and Al the remainder. Prior to Ramon’s death, depreciation deductions of $12,000 had been claimed on the property. When Ramon died, the property was worth $60,000. Local law mandates that Ramon and Al as joint tenants each have a half interest in the property. Al’s basis at Ramon’s death is computed as follows: Al’s interest purchased with his own funds $10,000 (1/3 of original cost) Interest inherited from Ramon 40,000 $50,000 (2/3 of $60,000 FMV) Less: 1/2 of depreciation <6,000> Al’s basis at Ramon’s death $44,000If Al hadn’t contributed any part of the purchase price, his basis at Ramon’s death would be $54,000 ($60,000 FMV less $6,000 depreciation on the half interest he acquired before the date of death).If local law had determined that Al had no interest in the income from the property and if he contributed no part of the purchase price, his basis at Ramon’s death would be $60,000 (the FMV).Note: If the surviving joint tenant is a spouse, a more liberal rule than shown in the example above applies. ”
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