@wlee1120 wrote:
If I don't decide to capitalize, would these costs to maintain the property still be deductible? If so, where would I enter them in the trust tax return (1041)?
Property taxes would be deductible on Line 11 of Form 1041 (Taxes in TurboTax Business) while mortgage interest would be deductible on Line 10 (Other interest expense in TurboTax Business).
As far as the other costs, you need to look at allowable deductions under Section 67(e) - good luck with that because there are arguments all over the place for whether or not those miscellaneous expenses are deductible by a trust. However, the widely accepted position is the expenses are deductible to the extent they would not have been incurred if the property were not held in a trust.
