Tax return for 2019, how to compute a rental house income.

Anne Smith’s mother, Lilly, died on July 2, 2018, leaving Anne her entire estate. Included in the estate was Lilly’s residence (325 Oak Street, Cincinnati, Ohio 45211). Lilly’s basis in the residence was $30,000. The fair market value of the residence on July 2, 2018, was $155,000. The property was distributed to Judy on January 1, 2018. The Smiths have held the property as a rental property and have managed it themselves and they started renting the house to the same tenant starting January 1, 2019. To compute depreciation on the house, the Smiths had allocated $15,000 of the property’s basis to the land on which the house is located. The Smiths collected rent of $1,000 a month during the six months the house was occupied during the year. They incurred the following related expenses during this period: property insurance $500, property taxes $800, maintenance $465, depreciation (to be computed).

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