Vacant Land for Business Use

[mrwunder]

I purchased a small vacant land parcel (1 acre) for use related to my construction business.  I use it to store equipment, process firewood (for sale) and as a general work site to build things eventually moved to other sites.  There are no buildings; there is no loan (I paid cash out of my personal account).  Do I add this as a business "asset"? Some kind of general business expense? What, if anything, can I do with this .... or should I just consider this a personal property and leave it at that?

[MichaelMc · Accepted solution]

From a strictly tax viewpoint, I see very little that would be gained by treating the vacant land as a business asset. It is not depreciable and there is no associated loan that would carry tax deductible interest. Your only reasonable tax deduction would be real estate taxes, which I expect are minimal on an acre of vacant land.

Departing from tax considerations, I would urge you to speak with your legal advisor and insurance agent, if you have not already done so, to be certain that your business and you, personally, are protected from any liability that might arise from your use of the land (injury to workers or visitors, etc.).

[The_Kasl]

While the original submitter said s/he purchased the land, there was nothing said that verifies it was with, or without a loan. With a loan the interest should be a business expense.

Not sure where the land is, but in our very rural location, 1 acre can still have thousands of dollars in taxes, so I personally don't consider that negligible. (grin).

The cost of maintaining the land (and the insurance you mention) are all associated with the land. Seems worthwhile to list it as an asset. Especially if one is going to improve it (say an outbuilding for construction).

I am neither a lawyer, nor a tax accountant, so these are opinions.