Deprecation

Forum|Forum|4 years ago
March 12, 2022
2 replies
11 views

How to I depreciate a property that I started building in 2020 and will settle with the buyers this year

2021. My initial investment is 300,000 and I will receive 6 million with the sale?

ProSeries Professional

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T

TaxGuyBill

Level 15

If the purpose of this activity is to build and sell a building, it is not depreciated at all.

Where are you reporting this activity on the tax return? On Schedule C as a business?

abctax55

Level 15

Nor do you 'deprecate' it <w>

HumanKind... Be Both

qbteachmt

Level 15

Depreciation = the allowable amount to take as an expense for something that has a long useful life, such as real estate (fixed assets), to show it is wearing out a bit over time as you use it for business functions. That's why there is a place to enter the date for "placed in service."

This is not your business fixed asset. This is your Inventory Asset. You are investing in something which, at the end, will not be yours because you sold it. Even if that crosses a year end, your invested value is right there in that project. Until you use it or sell it, it's just "improvement" as inventory.

Hope that helps.

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