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Updated about 1 year ago on . Most recent reply

Do carrying costs increase cost basis?
I'm having trouble finding a definitive answer on this. Assuming I purchase a house with the intent to fix and flip in a 6 month window, do the carrying costs I pay increase my cost basis, such that my taxable profit is decreased?
So, for example, assume
Purchase 80k
Rehab 20k
Closing 5k
Carry 10k
ARV 175k
Sell commissions/fees 15k
Would my taxable profit be 45k (carry costs included) or 55k (carry costs excluded)?
Thanks!
Most Popular Reply

Peter Mckernan
#5 Rehabbing & House Flipping Contributor
Agent
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- Residential Real Estate Agent
- Irvine, CA
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Carrying cost loan (closing costs on loan and interest), utilities, etc can be written off from a tax standpoint to reduce your liability/
- Peter Mckernan

The McKernan Group
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