Rental properties can be great transfer vehicles when held individually till death. Upon death the property gets a step up in basis to the market value at the time of death, if held in the owners name.

Once a property has run through its depreciable life and paid off it’s mortgage it will generate a tremendous amount of income with very little allowable expense.

Selling it would require the recapture of the depreciation and a large tax bill.

So, think about it as a transfer vehicle to the heirs, if they sell, the capital gain or loss will be minimal.

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