Deduct cost of inspection for property I didn't end up buying?

3 Replies

Hi, (I know you can't post authentic tax advise, just looking for general tips, thanks!)

I paid for 2 inspections on 2 rental homes that I did NOT end up buying. I kept shopping and finally bought a third rental property. 

Might the costs of the first 2 inspections be deductible somewhere? I don't have a LLC, I file Sch E for my properties as pass-thru income. Thanks for any ideas, I will take them to my accountant!

Yes, but ask your CPA. 

@Andrew R.

I am not a CPA but from my understanding of what CPA's have stated here on BP, you can't write off the inspection on a property unless you have actually acquired the property. Many people would be writing off inspections left and right if you can do it without actually buying a property. You would have been able to write it off if it was through an LLC, because then it would be considered a business expense.

In general, you should be able to add the cost of those inspections to the next property's basis that you purchase.  It is an acquisition cost, essentially, for the property you finally purchased.

However, the property purchased generally must be in the same geographic area and the same asset class as the properties you inspected.  Definitely talk to your CPA about it - they'll have a very good understanding of your overall situation and will be able to advise you best.

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