Mother's house was in a Revocable Trust that became Irrevocable on death. Currently about one year since DOD so post-mortem expenses related to house during the period the Trust is holding the house until sold have become significant.
House receives a step-up of cost basis on death to FMV as of date of
death. Real estate taxes are deductible on Form 1041 but there is no
income so the deduction is lost if claimed on Form 1041.
In addition to real estate taxes, there is insurance, utilities, yard
maintenance, advertising, etc that I am hoping to add to the FMV as of
DOD to determine the cost basis when sold.
Although these expenses are routinely added to cost basis for those
flipping houses, my accountant has some concern as to whether this is
legitimate for a Trust.
Accountant cites an election to capitalize real estate taxes and
interest but not sure this is applicable to Trust. There is no
interest since there is no loan. Obviously, my question is broader
since it includes adding all expenses to the cost basis. House is
empty except when I am there as Trustee so there is no rental income.
- posted 7 years ago
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