The Pennsylvania Inheritance Tax is levied on the net estate value, meaning the fair market value of the estate’s assets less expenses and debts.
If repairing the house for sale is reasonable, and the expenses paid are reasonable, they will be deducted from the sale proceeds when calculating the net estate.
As an executor, you need be careful about spending money to repair the house. If the repairs end up not increasing the home’s value, the Department of Revenue may not allow the deduction and the heirs may also object to the expenses. The heirs could ask the Orphans’ Court to surcharge you for expending estate funds unreasonably, and ask you to make up the loss.
Generally, repair costs are deductible as an expense on the Pennsylvania Inheritance Tax return, but be careful to document the expenses and, if possible, have your Philadelphia Probate Attorney obtain written permission and agreement from all interested beneficiaries prior to you making the expenditure.
If you have questions about probate in Philadelphia County, Pennsylvania, feel free to contact our office for a free consultation. Wills, Trusts and Estates, It’s all we do!
Peter Klenk, Esq