Question on Basis of Estate Home

[peggysioux]

Taxpayer is an executor of estate where decedent passed away in 2015. House didn't sell until 2018 and appraisal was not done until 2018 but appraised at 2015 DOD. My question is this....if executor did repairs and improvements prior to appraisal, would you increase basis by the improvements made from 2015 to 2018 if appraisal was based on 2018 condition but comps at 2015 DOD?

Input is always appreciated.

Peggy Sioux

[kathyc2]

My Mom died last year and I had her house appraised. I was a bit surprised by the criteria or lack of that was used. Square footage, location, age and number of bedroom, baths, fireplace etc. Since the appraiser used other home sales from MLS they really wouldn't know how the overall condition compared for the appraised house to the others they used for comparable. We ended up doing about 5K of repairs and I'm going to add it to basis.

Unless your clients appraisal report had an upward adjustment for repairs they did, I don't see why you couldn't add to basis.

[Lion]

If the appraiser based his report on the house WITH improvements through 2018, and then backed into a 2015 appraisal, then wouldn't you SUBTRACT the improvements? They were not there on DOD, but the appraiser considered them in his report.

[Burke]

My question is this....if executor did repairs and improvements prior to appraisal, would you increase basis by the improvements made from 2015 to 2018 if appraisal was based on 2018 condition but comps at 2015 DOD?Peggy Sioux

Not sure I understand the last part of your question. Add costs of improvements & repairs prior to sale to DOD values (2015) and you have your basis, before adding costs of sale. (Use comps at DOD or tax valuation if they appraise at 100%.) Don't forget to include value of land. Appraisal in 2018 does not enter into the calculation.