Spec home

[Elyfrank]

Hi,

I built a house last year and sold it for a profit this year.

I want to put all my expenses and profit in the 2021 taxes.

I already submitted all the 1099 and 1096 to the irs.

How, where do I tell the IRS this? On the schedule C or 1040, which line? what do I put for the 2020 taxes?

thanks a lot.

[HelenC12]

If you built and sold the spec home in 2020, you would declare it on your 2020 income tax return not 2021.

If you're self-employed and in the business of building and selling spec homes, you'd complete Schedule C (Form 1040), Profit or Loss from Business. 

Enter your 1099 outside contractors on Schedule C, Line 11, Contract Labor. 

• Contract labor includes payments to persons you do not treat as employees (for example, independent contractors) for services performed for your trade or business.
• See Where do I enter my self-employment business expenses, like home office, vehicle mileage, and suppli...

[Elyfrank]

Hi,

it looks like you didn’t understand or read my question properly.

I built it last year (2020) and sold it this year (2021)

[Irene2805]

If your business is on a cash basis, you report income and expenses in the year they are incurred.

On your 2020 return, report the expenses you paid (contractors, supplies, etc.) on the Schedule C for your business.  You would also report any income you received during the year (2020).

On your 2021 return report the sale of the spec home.  To do this you would have to calculate the basis of the property.  Briefly, your basis is what you paid for the land, plus improvements (since this is new construction the entire house is the improvement), plus some of the closing costs when purchased.

Please these resources for additional information on calculating basis:

• What is adjusted basis of home
• What is the definition of cost basis? - TurboTax