tax treatment of land parcel purchase for business

Forum|Forum|4 years ago
July 20, 2021
2 replies
13 views

Hello,

can I deduct mortgage and property tax on Schedule C for parcel of land purchased for Interstate trucking business?

land is not developed and there is no income for the business in the tax year yet, but intention is to use lend in the trucking business.

ProSeries Professional

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T

Terry53029

Intuit Community Champion

You can elect to IRS code 266, the IRS allows taxpayers to capitalize taxes and carrying charges that would otherwise be deducted or wasted. If you have costs associated with your investment property, including interest, property taxes, and other carrying charges, such as insurance and maintenance costs, you can elect to capitalize these expenses. However, you cannot elect to capitalize these costs if the property is operating as a business or anything other than investment purposes, such as a parking lot

qbteachmt

Level 15

"can I deduct mortgage"

No.

"and property tax on Schedule C"

Possibly.

The mortgage that is against the amount borrowed (the "principal") is the cost of the land. There is no Deduction for this, because the value isn't a write off. It's an investment. It's right there = in the Land. They now own land. This is called Basis. If this is new to you, you will want to read up on this concept.

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