Can I write off inspections on a house I turned down

11 Replies

I have paid over $600 For a house inspection, radon testing, and a pipe scope on a potential home I was going to move into and then fix up and eventually rent out. Am I allowed to write this off on my taxes?

Originally posted by @TJ Brown :

I have paid over $600 For a house inspection, radon testing, and a pipe scope on a potential home I was going to move into and then fix up and eventually rent out. Am I allowed to write this off on my taxes?

 Do you already have a rental business? Is this for a partnership?  we need more information. 

@TJ Brown   When you say "write off", just to be clear, inspection costs wouldn't have been deductible even if you would have actually bought the property.  If anything, they get added to the basis of the property.

But it's not clear (at least to me) if this was a primary residence, a flip, or a rental.  Like @Ashish Acharya said, more info is needed.  And even then, the answer is probably "it depends". 

Read these threads for more info:

Can I deduct $1200 expense for a property I did not buy?

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

Can I deduct inspection fees on rental we didn’t buy?

I'm not a tax pro though.  So perhaps an actual tax pro will chime in with better advise (or consult yours for the best advice since they're likely more familiar with your specific tax situation).

Best of luck on your next purchase!

It doesn’t matter if you have an entity or not. This is for a personal residence so there is absolutely no expense write off.

Wayne has it right.  Based on what OP conveyed, this is a personal, non-deductible expense.

No more information required.

Originally posted by @Russell Brazil:

I had to steal it and repost in a tax professionals group. Awesome!

@Russell Brazil has the write answer. One of my favorite Seinfeld episodes. People who don't understand business think a write off is some magical thing. A write off is simply claiming a legitimate business expense against income received in your business. If it is not used in your business, it is not a write off. If have no business or no income, there is no write off. 

As Wayne said, it is a primary residence, so no you cannot claim it as a business expense. Even if you moved into the property, the expenses to acquire and rehab would likely not be a business expense. The property needs to be put in service as a rental property, before you can claim expenses. Any work you do before that may add to basis, but isn't a write off. Talk to a CPA as before you acquire a property so you understand what and how to track expenses.

If you buy a property as a rental property and you are already in the rental business (meaning you are getting income from other properties) then you could likely claim this as an expense. 

@Matthew Irish-Jones you don't need to have a corporation or LLC. A sole proprietorship can deduct business expenses for an active rental business, even if all the properties are held in their own name. Maybe that is what you meant by "other entity", but I just wanted to clarify that you don't need a business entity to have a business. In this case it doesn't matter what entities he has, because it is a personal residence.