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f_m
Returning Member

Can i deduct repair expenses on inherited house before deeded in order to get ready to sell house? never lived in when owner died was in probate for 2 yeares

 
10 Replies
Critter
Level 15

Can i deduct repair expenses on inherited house before deeded in order to get ready to sell house? never lived in when owner died was in probate for 2 yeares

No ... instead those expenses will be added to the basis of the home to be used when you sell it. 

f_m
Returning Member

Can i deduct repair expenses on inherited house before deeded in order to get ready to sell house? never lived in when owner died was in probate for 2 yeares

I guess I am concerned that i was not deeded when i made repairs I made repairs in April and early May, I was deeded late May?
Critter
Level 15

Can i deduct repair expenses on inherited house before deeded in order to get ready to sell house? never lived in when owner died was in probate for 2 yeares

Not an issue.
Hal_Al
Level 15

Can i deduct repair expenses on inherited house before deeded in order to get ready to sell house? never lived in when owner died was in probate for 2 yeares

You were an "equitable owner" and, for tax purposes, may treat the property as if you owned it
f_m
Returning Member

Can i deduct repair expenses on inherited house before deeded in order to get ready to sell house? never lived in when owner died was in probate for 2 yeares

thank you, therefore a will pending probate is proof that i am an equitable owner and can make repairs?
Hal_Al
Level 15

Can i deduct repair expenses on inherited house before deeded in order to get ready to sell house? never lived in when owner died was in probate for 2 yeares

Yes.
Hal_Al
Level 15

Can i deduct repair expenses on inherited house before deeded in order to get ready to sell house? never lived in when owner died was in probate for 2 yeares

Until you put it to use as your primary or second home or as rental property, or sell it, you have an investment property. The carrying costs (e.g. maintenance, insurance & utilities) of investment property are deductible as investment expenses, but are subject to being a misc. itemized deduction also subject to the 2% of AGI threshold. Real estate (property) tax may be deducted on schedule  A, under taxes, without regard to the 2% rule.

As Critter#2 said, extensive repairs, done solely to get the property ready to sell, must be added to your cost basis.

Alternatively, taxpayers can elect to capitalize (add it to your cost basis)  the carrying costs of unimproved and nonproductive real property, real property under development or construction and personal property before its installation or use (Regs. Sec. 1.266-1(b)(1)).  The election is made with the tax return by its due date, including extension, by attaching a statement. You cannot wait until you sell the property, but must make that election each year. Attach the statement to the return and write “Filed pursuant to section 301.9100-2” on the statement. 

Mortgage interest is only deductible to the extent of other investment income and not subject to the 2% of AGI rule,  but can be capitalized. 

De11eY6
New Member

Can i deduct repair expenses on inherited house before deeded in order to get ready to sell house? never lived in when owner died was in probate for 2 yeares

Can I deduct repairs on inherited house before deeded, in order to get ready to sell house?

DoninGA
Level 15

Can i deduct repair expenses on inherited house before deeded in order to get ready to sell house? never lived in when owner died was in probate for 2 yeares


@De11eY6 wrote:

Can I deduct repairs on inherited house before deeded, in order to get ready to sell house?


Repairs on a personal residence, not used as a rental, are not entered on a tax return as either an expense or a deduction.  Only the cost of improvements which increase the value of the home or extend the life of the home would be added to the Adjusted Basis of the residence when it is sold.

Hal_Al
Level 15

Can i deduct repair expenses on inherited house before deeded in order to get ready to sell house? never lived in when owner died was in probate for 2 yeares

Q. Can I deduct repairs on inherited house before deeded, in order to get ready to sell house. 

A. Yes, sort of. "Fix up" costs may be added to your cost basis, in determining your gain or loss on the sale. 

 

Inherited property is treated as investment property, unless you actually use it for personal use, including letting family or friends live there. So  if there was no personal use, you may add the cost to your basis.

 

The older answers, above,  refer to pre-2018 tax returns. Under the old law, repairs could be deducted on schedule A (instead of adding to the basis). That is no longer allowed.

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