Yes, there is an IRS provision under §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.
- Example: "For tax year _____, taxpayer hereby elects under Code Section 266 and IRS Regulations 1.266-1 to capitalize, rather than deduct, property taxes and HOA fees on ________________ vacant land."
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