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opst2323
Returning Member

Does trustee of grandmothers rental property get repair and property tax deductions

An estate lawyer recommended grandmother adding grandson as trustee of rental property instead of adding his name to deed of property. She wants to release all her responsibilities to the property. Grandson will get rental income after some repairs made.  Can grandson deduct the expenses of rental and repairs needed to that property as its trustee in grandmothers trust while Grandmother is still alive. 

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2 Replies

Does trustee of grandmothers rental property get repair and property tax deductions

You need professional tax guidance for this scenario.

 

Trusts bifurcate ownership between legal and equitable; the trustee has legal ownership while the beneficiary has equitable (beneficial) ownership. Merely adding a trustee to what appears to be a grantor trust would be insufficient to confer full ownership of the property to that trustee for federal income tax purposes.

 

Again, seek professional guidance from a tax professional and also ask your estate lawyer relevant questions about how this structure will benefit both parties, legally and from a tax perspective.

Carl
Level 15

Does trustee of grandmothers rental property get repair and property tax deductions

When it comes to trusts, there are so many different types and just as many ways each type can be set up. I myself don't even try to pretend I know what I'm talking about when it comes to trusts. Especially living trusts. But I would think that if the rental property is in a trust, then all income is reported on the 1041 trust return, as are all expenses including property taxes. How that would be transferred to a beneficiary of the trust via the K-1 is well beyond my ability to comprehend though. So that's a good reason to seek professional help. This is especially important if your state taxes personal income.

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