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Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 28084
Experience:  Taxes, Immigration, Labor Relations
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A blind taxpayer had a daughter living with her. The

Customer Question

A blind taxpayer had a daughter living with her. The daughter never married. As part of the will she may remain in the house for 3 years and maintaing the house.T he question is the
basis of the house plus allocations applied to Form 1041.First, the starting basis is FMV at time of death plus major improvements to the house. E orven unoccupied there would be expenses..For insurance the daughter has to purchase renters insurance and the estate the
regular house insurance.Wold this apply to real estate taxes as well. Can a portion of
operating expenses ,as utilities, be applie to the estate?
Submitted: 9 months ago.
Category: Tax
Expert:  Lev replied 9 months ago.

IN order to use stepped up basis for the property - the property should be considered as inherited - means - included into the estate.

Expert:  Lev replied 9 months ago.

In this case - the stepped up basis is the FMV at time of death. That basis is adjusted by improvements after the death.

If the estate keep the property and not distribute the property to beneficiaries - that is OK.
The estate may pay operating expenses such as utilities, etc - that is not an issue - however if the property is used for personal purposes - these operating expenses may not be deducted by the estate.

The estate will be able to deduct real estate taxes and mortgage interest.

Let me know if you need any help with reporting.