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Mom pd her own money during probate to save real estate inheritance. How can her tax basis in the property be upped accordingly?

Alexandria, VA |

Daughter had no Will & each parent was eligible to inherit 50 percent. Deadbeat Dad agreed to forfeit his interest to Mom 3 yrs after daughter's death. Meanwhile, Mom saved estate by personally paying all bills: property taxes, mortgages etc. for real estate valued at "0" in estate inventory (unsaleable due to storm damage until repaired). How can Mom increase her tax basis in the real estate (finally titled to her) so that when it sells, she can "recover" amounts she pd during probate? Mom repaired it & it's listed it for sale, but if her basis is "zero" despite paying all bills during probate, cap gains tax will decimate recovery of the money she pd that saved the property. How & when can she file an increase in basis on her tax return &/or the estate's? Or is it a loss carry-forward?

Attorney Answers 3


I agree with my colleagues. There is not enough information to say for sure, but there should be a step-up in basis for the property to the fair market value, as of the date of death. Since the property has apparently been held for three years since that time, any gain would reflect only an increase in value from the date of death. Whether administrative expenses can be used to augment the basis and offset that gain, I tend to doubt. But the costs of modifying, updating and selling the home would certainly count.

Your mother should visit with a CPA or tax attorney to discuss this matter in more detail.

James Frederick

***Please be sure to mark if you find the answer "helpful" or a "best" answer. Thank you! I hope this helps. ***************************************** LEGAL DISCLAIMER I am licensed to practice law in the State of Michigan and have offices in Wayne and Ingham Counties. My practice is focused in the areas of estate planning and probate administration. I am ethically required to state that the above answer does not create an attorney/client relationship. These responses should be considered general legal education and are intended to provide general information about the question asked. Frequently, the question does not include important facts that, if known, could significantly change the answer. Information provided on this site should not be used as a substitute for competent legal advice from a licensed attorney that practices in your state. The law changes frequently and varies from state to state. If I refer to your state's laws, you should not rely on what I say; I just did a quick Internet search and found something that looked relevant that I hoped you would find helpful. You should verify and confirm any information provided with an attorney licensed in your state. I hope you our answer helpful!

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Please bring this question to a local probate and/or tax attorney who should be able to figure all this out. A cursory glance suggests that perhaps the inventory should be amended to change the date of death value of the property from zero. If you have not had professional assistance to this point, please get some. This can be quite complicated and, as you are discovering, can have large financial implications.

Please note: The above is for general information purposes only. It is not intended to establish and does not establish any attorney-client relationship.

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I am curious how the "0" value was really arrived at. In most situations, inherited property receives a stepped up basis to the date of death value of the person who passed...Depending on what is in the rest of the other probate file, I might suggest getting someone to do an appraisal as of date of death of the daughter to establish what mom's basis is now. You need legal and tax advice, this is not something you can do alone.

This is not legal advice nor intended to create an attorney-client relationship. The information provided here is informational in nature only. This attorney may not be licensed in the jurisdiction which you have a question about so the answer could be only general in nature. Visit Steve Zelinger's website:

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