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1. Since my mother's Trust owns her house, & I paid the repairs out of my accts, how do I deduct them - or can I? My mother left her house to me, but it is still in her Trust until the other beneficiaries are paid. The Trustee has allowed me to act as his "agent", continuing to pay bills, and take care of much of the administrative affairs for my mother's estate since I did all of it for years before she passed away. I was not paid for any of this work.

To keep her house, it will have to be rented. (The house was listed for rent mid November, 2015.) I handled all the deferred maintenance and remodeling work and paid for all of it out of my own accounts. The expenses were more than $30K last year, and there is still a punch list to go this year.

2. How to deduct the expenses last year against the rental income this year? Since the Trust owned the property in 2015, and I will receive ownership this month, can last year's expenses incurred for the Trust be deducted again future income for my property this year?

3. Do 1099-misc forms need to be filed for the contractors who worked to get it ready for rental? There are about a dozen individual contractors for whom I paid more than $600 last year. The Trustee tells me that 1099 misc forms are not required because the Trust is not a business. My understanding is that if I don't send the forms in, I can't deduct these expenses against the future income - or maybe it is a moot point given the possible answers to questnings 1 & 2.

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The Trustee has allowed me to act as his "agent", continuing to pay bills, and take care of much of the administrative affairs for my mother's estate since I did all of it for years before she passed away. I was not paid for any of this work.

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The expenses were more than $30K last year, and there is still a punch list to go this year.

The trust should reimburse your expenses and deduct them on the trust tax return.

Since the Trust owned the property in 2015, and I will receive ownership this month, can last year's expenses incurred for the Trust be deducted again future income for my property this year?

Not exactly. The trust will file its own tax return and will report the income/loss attributed to the beneficiaries per the trust rules. What is attributed to you will flow to your Schedule E. From there you own it and if it is a passive activity where the loss is limited - you can carry it forward and offset with future gain.

The trustee will have to deal with all the paperwork.

Do 1099-misc forms need to be filed for the contractors who worked to get it ready for rental?

It is my understanding that since 2010 (and before 2010) landlords who are not in real-estate trade or business are not required to send out 1099. But it won't hurt if you do, also.


In any case - for all of these issues you should talk to a tax adviser (EA/CPA licensed in your State).

  • Thank you for helping me out. The Trustee recommended an accountant that I will use for my taxes this year, but with the deadline for 1099s coming up, I needed a quick answer which you've provided. I don't think the Trustee has anywhere close to $30K to reimburse me. Is there a strategy to get around this? (He never billed me or took a retainer b/c I've been living on SS in order to take care of my mother. I finally managed to get a loan on my house so I can now pay him.) – BK Lewis Jan 27 '16 at 19:53
  • @BKLewis it's hard to provide a specific advice for your personal circumstances based on so little information. If the trust cannot reimburse you - it will just be added to your basis as part of the distribution, I guess. Bottom line it's something you, the trustee and the other beneficiaries need to figure out. Get an accountant to help you out with the paperwork, and maybe a lawyer for a 1-2 hours consultation. – littleadv Jan 28 '16 at 6:07
  • Thank you for your advice and time spent. I'll set up an app't w/ the CPA the Trustee recommended. :-) – BK Lewis Jan 29 '16 at 21:50

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