Why sign in to the Community?

  • Submit a question
  • Check your notifications
Sign in to the Community or Sign in to TurboTax and start working on your taxes
New Member
posted Oct 29, 2019 9:33:43 PM

I began renovations on a property prior to purchasing it. How do I write off expenses?

0 1 553
1 Best answer
New Member
Oct 29, 2019 9:33:45 PM

Presumable, you are using the property for rental income, and/or a business income.  If you are not, or are merely looking to flip the property, then the expenses are included with the cost of the property and used when calculating the capital gain or loss upon selling the property.

The renovation expenses enhance the value of the property and are therefore capital expenses and included as part of the cost of the building.  You could depreciate the value of the building, though if you did you do want some documentation that indicates the value of the building, as you have to separate that from the value of the land.  Land does not depreciate.  If you did claim depreciation on the building, bear in mind that when you sell the property then you could be subject to a recapture of the depreciation, which can adversely affect your taxable income.

1 Replies
New Member
Oct 29, 2019 9:33:45 PM

Presumable, you are using the property for rental income, and/or a business income.  If you are not, or are merely looking to flip the property, then the expenses are included with the cost of the property and used when calculating the capital gain or loss upon selling the property.

The renovation expenses enhance the value of the property and are therefore capital expenses and included as part of the cost of the building.  You could depreciate the value of the building, though if you did you do want some documentation that indicates the value of the building, as you have to separate that from the value of the land.  Land does not depreciate.  If you did claim depreciation on the building, bear in mind that when you sell the property then you could be subject to a recapture of the depreciation, which can adversely affect your taxable income.