Is Renovation Travel Deductible?

Question

Renovating a house I bought in another state over several yrs, and they were hoarders. Little by little I travel there to empty it out and repair it with the intention of eventually selling it. Are the travel expenses deductible? And are the rental truck expenses to donate things to charities deductible?

Natalie Kolodij · Answer

A corporation doesn't impact the deductibility. It's not deductible as she's not in business yet. The rental isn't operational yet.

Account Closed · Answer

Sounds like a non-performing asset to me. Where is the property?

Natalie Kolodij · Answer

Nope.

A property isn't "in service" until it's being advertised and or available for rent.

All costs incurred prior to that point are really costs to get the property acquired and ready to be put into service. These costs are all capitalized as costs to acquire the property. From a business standpoint acquisition costs are both costs to BUY and to make an asset ready for business use.

She's not in business yet. She's still in pre-operational stage per the IRS.

Or if she intends to sell it then all of these costs are part of the "renovation" costs that get reported in the year of sale.

Either way, there is no business to deduct these expenses against currently.

Doug W. · Answer

Can't she deduct her costs each year via Schedule C? Per the IRS: "Use Schedule C (Form 1040) to report income or (loss) from a business you operated or a profession you practiced as a sole proprietor. An activity qualifies as a business if your primary purpose for engaging in the activity is for income or profit and you are involved in the activity with continuity and regularity."

Shawn Ward · Answer

@VICTORIA LEONE if you have a corporation, then this sort of travel should be deductible. But def check w/ a CPA.

All the best!

sjw

Natalie Kolodij · Answer

Sounds like a very slow flip.

You can track all these expenses that are going into getting it ready to sell- it will reduce your gain/profit when you sell. You can't deduct them as you go each year.

Is Renovation Travel Deductible?

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