Since the trust has no Income and the expenses in questions are about $ 5K (and I think subject to 2% hurdle).....I am thinking I might be able to take the 266 section election to greater advantage by capitalizing these expenses instead - and using them to increase my LT Capital loss on the sale of the residence.  I think this might be OK for the property taxes, home insurance, utilities - although perhaps capitalizing the condo association  common charges might be a bit of a reach.  Would welcome your thoughts on this.  Again thanks so much for your assistance!

Where are these costs entered into the trust tax return? 

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@GLB wrote:

Where are these costs entered into the trust tax return? 

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The costs, if an election is made to capitalize, are not entered into the trust income tax return (Form 1041).

 

Rather, an election is made by attaching a statement to the return and, thus, any such costs are added to the basis of the property. 

 

See https://www.law.cornell.edu/cfr/text/26/1.266-1

@tagteam  wrote

The costs, if an election is made to capitalize....

 

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)?

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@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)?

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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.