Business expenses

B4U — Wed, 27 Oct 2021 17:41:41 GMT

I opened a small mobile ice cream business this year. I invested about $50k into a little

vintage van that will be the “scoop shop”… Earlier this year I also sold an investment property that I owned for 2 years, and the profit was close to $200k. I am self employed, so I’m curious if the $50k I invested in the startup of the ice cream business could be used to offset the tax burden from the sale of the investment property?

Re: Business expenses

AdamNe — Wed, 27 Oct 2021 18:29:28 GMT

Hello @B4U , thanks for your question!

Your investment in the new asset for your new business will not directly offset your capital (and ordinary) gain from the sale of the real estate property.

However, in the sense that the $50,000 for the asset may be able to be expensed as a business expense (either in the form of depreciation over time, special depreciation up to 100% or Section 179 expense), and that expense will decrease your net business income, the investment will "offset" your overall tax liability. It just doesn't interact directly with the gain from the sale of real estate on your tax return.

topic Business expenses in Self employed

Business expenses

Re: Business expenses