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I set up a business for my self-build (new home). What can I deduct if I am operating as my own general contractor?

I set up a business for a self build and have been keeping track of things such as equipment purchases and rentals(and the insurance and interest paid), fuel and repair costs, etc. What I am not sure can be deducted would be things like hiring a tree service to remove some large trees, or the costs of delivery and materials for a small drive in (not a complete driveway). Are those things deductible? Where is the line drawn between the business expense and the "home owner's" expense ?
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8 Replies
JohnB5677
Expert Alumni

I set up a business for my self-build (new home). What can I deduct if I am operating as my own general contractor?

Yes, the things you mention are legitimate contractor expenses.  

  • The big thing you cannot take as an expense is your time.  
  • Consider your business as if you were building the home for some yet unknown buyer.
  • The trees and driveway would be part of the finish work to sell the home.
  • That would also include siding, painting and landscaping to mention a few others.
  • The buyer then pays the price for all of those features when they buy the home.
  • You will also when you pay off construction loans, make a down payment and take out a mortgage.
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I set up a business for my self-build (new home). What can I deduct if I am operating as my own general contractor?

Oh. Interesting. Where does this get entered on my tax form in Turbotax?

I set up a business for my self-build (new home). What can I deduct if I am operating as my own general contractor?

What I don't believe is clear, is whether this is a home that you will sell OR is this your personal residence that you are building?

 

*A reminder that posts in a forum such as this do not constitute tax advice.
Also keep in mind the date of replies, as tax law changes.

I set up a business for my self-build (new home). What can I deduct if I am operating as my own general contractor?

Most likely will be a personal residence.

I set up a business for my self-build (new home). What can I deduct if I am operating as my own general contractor?

@Rick19744 Does the fact that this will likely be my personal residence matter?

I set up a business for my self-build (new home). What can I deduct if I am operating as my own general contractor?

Yep.

You can't circumvent the tax code by setting up a trade or business for expenses that are personal in nature and expect to get a tax deduction.  

If you review the response by @JohnB5677 , he assumed that you were a general contractor building houses that would be sold.  That was not clear in the original facts, which is why I asked the question.

 

 

*A reminder that posts in a forum such as this do not constitute tax advice.
Also keep in mind the date of replies, as tax law changes.

I set up a business for my self-build (new home). What can I deduct if I am operating as my own general contractor?

Ok. I'm thoroughly confused now. I worded the question as this was going to be a self build and I was acting as my own general contractor. The answer sounded like that was known.

I set up a business for my self-build (new home). What can I deduct if I am operating as my own general contractor?

No confusion on the end result.  Personal home......not a business......no deductible expenses for tax purposes.

If you read @JohnB5677 response again:

  • Indicated contractor expenses.......this assumes that you are in the business of building a home
  • Second bullet "......building the home for some unknown buyer"
  • Third bullet "....to sell the home"
  • Fifth bullet "the buyer.......when they buy the home"

Pretty clear that @JohnB5677 is assuming that you are in the business of being a general contractor and building a home for a potential buyer.  If he did not assume this, then the response is wrong.

Once again, that is why I asked the question.

Can't have Section 162 trade or business expenses, if you don't have a trade or business.  Where is the expectation of any profit in your scenario?  You aren't getting paid for your work.  This is not a business eligible for Section 162 expenses.

 

*A reminder that posts in a forum such as this do not constitute tax advice.
Also keep in mind the date of replies, as tax law changes.
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