You will add all construction costs to the basis of the home.
According to the IRS:
It
may also be required to capitalize (add to basis) certain other costs related
to buying or producing property, which includes the following:
- Settlement costs Asset basis
includes the settlement fees and closing costs for buying property.
However, fees and costs for getting a loan on property cannot be included
in the basis. A fee for buying property is a cost that must be paid even
if the property is bought for cash. The following items are some of the
settlement fees or closing costs that can be included in the basis of the
property:
- Abstract fees (abstract of
title fees)
- Charge for installing utility
services
- Legal fees (including title
search and preparation of the sales contract and deed)
- Recording fees
- Surveys
- Transfer taxes
- Owners title insurance
- Any amounts the seller owes
that the buyer agrees to pay, such as back taxes or interest
- Construction costs If a
business builds property or has assets built for them, the expenses for
this construction are part of the basis. Some of these expenses include
the following costs:
- Land
- Labor and materials
- Architect’s feesllowing costs:
- Building permit charges
- Payments to contractors
- Payments for rental equipment
- Inspection fees
Yes
No
