I will be consulting with a CPA/accountant/etc., but I thought I'd see if I could get an idea of what I'm looking at by posing my question here, first. I purchased a house last year for the purpose of renovating and reselling. I will have owned it a year, come June. I have a separate primary residence, this one is more of an investment. This house for renovation was paid for through an equity loan on my current home. I have been filing as an individual and don't plan to do anything fancy (e.g., LLC) for tax purposes when I sell the house. From what I've read and what I've been told via the IRS, mortgage interest and taxes for the house fall under Schedule A and any appreciation balanced by costs to acquire and improve (capital improvement) fall under Schedule D. I haven't sold the house yet, but I want to make sure expenses/interest/taxes go to the right places. Do I need to follow "capitalization" rules? Please someone explain that to me if so. Or is there another way I can report gains and expenses for a house renovation? Someone suggested that maybe using Schedule C would allow me to deduct other expenses that aren't strictly related to capital improvement, such as utilities and other fees. If anyone has some insight, I'd greatly appreciate hearing some words of wisdom. As I said before, I am planning on seeing a professional on this - I just wanted to get a handle on what kinds of things are possible. If this needs further clarification, let me know and I'll try my best. Thanks! dc
- posted
19 years ago
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