Can I renounce my interest in a gifted property?

Full question:

I was gifted a property with a small building on it by my grandfather. Till last year I have been using this property for my business purpose and the building was used as a warehouse. Now I have wound up my business and would like to renounce my interest in this property. How can I renounce my interest in the property?

Category: Wills and Estates
Subcategory: Disclaimer of Property Interest
Date: 04/07/2025
State: North Dakota

Answer:

No, you cannot renounce your interest in the property gifted to you by your grandfather. Under North Dakota law, you cannot disclaim a property interest if you have accepted it. Your use of the property for business and the building as a warehouse indicates acceptance. Therefore, North Dakota law prevents you from disclaiming this property interest. Relevant law states that a disclaimer is barred if the person has accepted the interest they wish to disclaim (N.D.C.C. § 30.1-10.1-10). This includes situations where the disclaimant has used the property or made any transfers related to it. Thus, you are unable to renounce your interest in the property.

This content is for informational purposes only and is not legal advice. Legal statutes mentioned reflect the law at the time the content was written and may no longer be current. Always verify the latest version of the law before relying on it.

FAQs

What is the basis of property given as a gift?

The basis of property given as a gift is generally the same as the donor's basis in the property at the time of the gift. This means that if the property has appreciated in value, the recipient may have to consider the original purchase price of the property for tax purposes. However, if the property is sold for less than the donor's basis, the recipient may use the fair market value at the time of the gift as the basis for calculating losses. This is important for tax implications when the property is eventually sold.

What is the difference between gifted and inherited property?

Gifted property is transferred during the donor's lifetime, while inherited property is received after the owner's death through a will or intestate succession. The tax treatment also differs; for gifted property, the recipient may take the donor's basis, whereas inherited property typically receives a step-up in basis to its fair market value at the date of the decedent's death. This can affect capital gains taxes when the property is sold.

What is the holding period of gifted property?

The holding period of gifted property is generally considered to be the same as the donor's holding period. This means that if the donor held the property for more than a year, the recipient can treat it as long-term property for tax purposes. However, if the property is sold for less than the donor's basis, the recipient may need to consider the fair market value at the time of the gift to determine the holding period.

Do you have to recapture depreciation on inherited property?

No, there is no recapture of depreciation on inherited property. When you inherit property, it receives a step-up in basis, meaning the basis is adjusted to the fair market value at the date of the decedent's death. This eliminates any depreciation recapture that would typically apply if the property had been sold during the owner's lifetime.

Is there depreciation recapture on gifted property?

Yes, there can be depreciation recapture on gifted property if the recipient sells it. The recipient takes the donor's basis, and if the property has been depreciated by the donor, any gain from the sale may be subject to depreciation recapture. This means that the IRS may tax the portion of the gain attributable to the depreciation taken by the donor.

Can you depreciate gifted property?

Yes, you can depreciate gifted property if it is used for business purposes. The depreciation is calculated based on the donor's basis in the property at the time of the gift. If the property is used for personal purposes, it cannot be depreciated. Keep in mind that the depreciation amount will affect your tax liability when the property is sold.

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