My mother inherited some property (a lot) from my father when he passed away. The property is leased out to a nursery. When my father passed away, she contracted with an appraiser to do a formal property appraisal. This appraisal was pricey. Can she use this as an expense on her taxes?

Not immediately.

She WILL be able to add the cost of the appraisal to the basis of the property, which will reduce the capital gain when she sells it.

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Originally Posted by AtlantaTaxExpert

Not immediately.

She WILL be able to add the cost of the appraisal to the basis of the property, which will reduce the capital gain when she sells it.

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Thank you for your quick response. I was going to amend her tax return to add this as an expense. My understanding of your response is that we add the cost to the basis of the property when the property is sold.

I appreciate your help.

While ATE is correct, I think there is a different issue here. This is not a personal expense. This was an expense that should have been charged to the estate. So this should have nothing to do with her personal return.

What Scott says is feasible IF your father passed in the last year or so and the estate has not yet been settled.

I was going by this statement:

"When my father passed away, she contracted with an appraiser to do a formal property appraisal."

So I assumed it was done right after and should have been charged to the estate.

Agreed; provided the estate is large enough to file an estate tax return against which the appraisal costs can be charged.

I'm not sure if this matters, but the property is part of a family trust and the property produces income. So a Schedule E was filed that year. I thought that this expense should have been included on this form.

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Originally Posted by ScottGem

I was going by this statement:

"When my father passed away, she contracted with an appraiser to do a formal property appraisal."

So I assumed it was done right after and should have been charged to the estate.

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Thank you for your comments. My father had everything in a family Trust and my mother became the Trustee. Does this information affect your response?

I appreciate your expertise on this issue.

I leave that part up to ATE, he can answer that one better than I can.

The appraisal costs can be deducted in the trust tax return on Schedule E.