Multi-family Tax Question
We are working on our 2016 taxes. In December 2016, we entered an agreement of sale for a multi-family (Triplex). We did an FHA loan as we intend to owner occupy one unit and rent the other two units. We had a structural engineer come out to take a look at a couple of issues. The main structural issue that the engineer was looking at was in the unit that we intend to owner occupy. A minor issue was in one of the units that we intend to rent.
We put our business-related expenses through our business for tax purposes. My wife feels that we should only be able to count two-thirds of the inspector's expense as business related because two-thirds of the units are to be rented. The other one-third should be a personal expense since we intend to owner occupy the third unit. I'm, on the other hand, wondering if we can treat the entire inspector's expense as a business expense since we were not literally owner occupied at any point in 2016--and hadn't even signed an FHA loan agreement yet.
We have not yet physically moved into the 3rd unit as rehab work is still being done. We're working to get in there asap. But, we currently still live in another location. Could someone familiar with taxes give me your opinion as to whether the expense should be two-thirds or the full amount (or something else) as a business expense? Hope this is clear.