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New Member
posted May 31, 2019 11:36:10 PM

My husband's father's estate finally closed last year, and we paid attorney fees. We also rented out the property for the entire year. Can we deduct the attorney fees?

We paid nearly $12,000 in attorney fees last year related to the handling of the estate, including a special situation where we inherited the land and the other person did not. The estate finally closed last year after 16 years in probate. We have paid taxes on this land the entire time it was in probate. Last year we rented the property for the entire year. We need to know if we can deduct the attorney expenses related to the property, since it was a rental property at the time, or if this still falls under general estate matters. The estate fees were almost 20% of our income last year. We had to borrow money, sell valuables, and go bananas to get this paid on time. Help!

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Level 15
May 31, 2019 11:36:11 PM

".... or if this still falls under general estate matters."

Unfortunately, the expenses most likely fall under general estate settlement rather than being property-specific. 

Even if the latter were the case, you cannot deduct legal expenses to defend, protect, or recover title to real estate even if the property were rental property at the time the expenses were incurred (those expenses would be capitalized and added to the property's basis, however).

4 Replies
New Member
May 31, 2019 11:36:11 PM

The attorney bill says "Estate Planning" as the service provided. Does that change anything?

Level 15
May 31, 2019 11:36:11 PM

".... or if this still falls under general estate matters."

Unfortunately, the expenses most likely fall under general estate settlement rather than being property-specific. 

Even if the latter were the case, you cannot deduct legal expenses to defend, protect, or recover title to real estate even if the property were rental property at the time the expenses were incurred (those expenses would be capitalized and added to the property's basis, however).

New Member
May 31, 2019 11:36:13 PM

If the attorney fees are marked on the bills/receipts "estate planning" does that make it any different?

Level 15
May 31, 2019 11:36:15 PM

No, that actually makes it worse. It would have been infinitely more helpful if the bills referred to just about anything that related to taxation or the collection or production of taxable income.