Expenses on a spec home built in 2 different years

[tkelly008]

I started a spec home in 2021, finished it in 2022 and will be selling it in 2022.  Can I wait to list the expenses paid in 2021 (like lumber, concrete etc) to 2022? Or do I have to take the expenses in the year they were paid?

[ErnieS0]

Please clarify your question. Why are you trying to deduct expenses? Generally, if you build something, the cost of materials and hired labor (not your own) plus the land because your cost basis.

The taxable gain is the difference between the sale price - sales expenses - cost basis.

The IRS says, "Basis is generally the amount of your capital investment in property for tax purposes."

For more info: Topic No. 703 Basis of Assets

[tkelly008]

Ah, I was thinking I would have to enter what I sell the house for in the income section and then in the expenses section, deduct what it cost to build it.  But all I have to do is enter the difference into the business income section?

[ErnieS0]

No. TurboTax will ask you to enter sales and cost and compute the taxable capital gain.

Where it's entered depends on what this house was built for. Did you built a personal residence? An investment property? Or are you in the home building business?