Cost Basis/Expenses for Inherited Home

[SensibleandHourly]

Hello, 

Can client add holding costs to the basis of inherited home? Client's parents lived in the home for over sixty years, and it took her two years to clean, maintain, and make a few repairs in order to sell as well as many intra state trips to accomplish the task. 

Sometimes inheriting a home isn't great! 😉 

Thanks everyone,

Dawn 

[Terry53029]

You can add the improvements to basis, but not the travel, as it is not a business property

[jritchie]

Costs to get the inherited home ready for sale increase the basis of the home the daughter held for this time frame.  At the death of her parents, the Fair Market Value of the Property became her starting basis.  Add to that any costs she paid (other than travel),  to get it ready to sell, such as repairs, upgrades, etc to the home.  When she sells this will provide a higher basis, thus tax she pays on the gain will be lower.   

Traveling from her home to her parents is not a cost that would increase her basis.  She will report the sale on SCH D and Form 8949.   

[SensibleandHourly]

Ok, so the repairs, but not maintenance, insurance, etc.? I've been reviewing Publication 551 and I get hung up on the difference between an inherited property vs a commercial property. Is there a better IRS Publication maybe? The client is very astute, and I'd like to share the proofs as to why she can't claim those expenses for an inherited home. 

Thank you, both, for taking the time to answer. 🙂