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Old 09-20-2011, 10:10 PM
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Considering tax consequences, should I rent out a house that I will inherit and probably sell, that has appreciated in value.

My mother bought her home in NH for $10,000 in 1942. It is in a revokable trust. The total parcel is now assessed at $670,900 (house is $168,500, and the land is $502,400). I rented the house out for the past year to help pay her assisted living expenses in MA and also to keep it occupied. It is not absolutely necessary to rent, because her pension and savings will possibly carry her through. Still, it helps. For tax purposes, I've been advised not to sell until after her death because the house would be valued on that date and this would reduce any capital gains. My question is: if we rent it for more than two years will the cost basis revert back to what she paid for it (plus $250K)? Renting helps in many ways, but is there any advantage in not renting? Thanks for your comments.



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