Trust deduction for real estate taxes

[hntrust]

A trust owns the house that the beneficiary lives in. The trustee pays the real estate taxes from trust income for the benefit of the beneficiary. Can the trustee deduct the taxes paid on form 1041 and also include that amount as income distributed for the beneficiary?

[Anonymous_ · Accepted solution]

First of all, note the limitation for state/local taxes, real estate taxes, and personal property taxes.

See https://www.irs.gov/instructions/i1041#en_US_2022_publink1000286135

Also, any expense the trust takes as a deduction will reduce the trust's DNI and result in that much less income to be distributed to the beneficiary.

[hntrust]

Real estate taxes are about $3,900 so I am under the limitation. So, in this case I shouldn't count the $3,900 as a distribution because I took it as a deduction, correct?

[Anonymous_]

Yes, the taxes would be deducted from the income.