Investor · Fort Myers, FL · Member since 2012 · 462 posts · 200 votes
I'm seeing conflicting information online.
As a "dealer in real estate", my homes are treated as inventory.
Because they are treated as inventory, is the purchase of a home deductible in the taxable year it was purchased ?
Example- I profit $250,000 on the sale of homes in 2016 and I purchase a $250,000 home in December. Is that $250,000 deductible against the profit I have earned and then the realized gain or loss deductible or taxable in the year sold ?
Or do I pay taxes on the $250,000 and wait until the "taxable event" of selling the homes takes place ?
There are multiple view points on the internet. Curious what the BP community has to say.
Without question, no the purchase of a property is Not tax deductible. I don't think purchase of inventory is even deductible,at the time of purchase, even in retail.....hence the reason for FIFO/LIFO.