I leased a second unit in a strip mall in order to expand my business from a Salon to a Salon & Spa? Where do I deduct remodeling expenses of the second unit?

[charles2]

Second unit is right beside existing unit. All clients enter through original unit and access the new spa through a door within the salon.The front door of the new unit remains locked at all times. Insurance classifies both units as a single business because of these two things.

Where would I deduct all the expenses incurred in retrofitting the new unit to meet my needs. The unit was previously used as an animal hospital. I'm talking about things like cleanup to pass code, construction to tear down and rebuild walls and entrance door from the salon, electrical work, painting, installation of a shower. The unit was basically gutted and rebuilt. We used a single contractor for just about all of the work. Any input would be greatly appreciated.

[Cindy0H · Accepted solution]

Margaret answers this question quite completely. The information is still current.

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