Constructing assets. If you build property or have assets built for you, your expenses for this construction are part of your basis. Some of these expenses include the following costs.
Land, [ land is separate ,land is not depreciated must allocate some cost to land]
Labor and materials,
Architect's fees,
Building permit charges,
Payments to contractors,
Payments for rental equipment, and
Inspection fees.
perating and maintenance costs for equipment used in the construction; and
The cost of business supplies and materials used in the construction.
Do not include the value of your own labor, or any other labor you did not pay for, in the basis of any property you construct.
For most types of investment property, the interest paid while improving, building, or constructing the real property falls under the Uniform Capitalization Rules, IRS code section 263A which requires that the interest incurred during construction or improvement should be capitalized instead of currently deducted.
To be placed in service, a unit is not required to be leased or occupied. Rather, receipt of a certificate of occupancy or other release issued by the local jurisdiction is generally accepted as the placed-in-service date.
