We had a lease in a commercial building in January 2017. I built out an office in the building. The lease was terminated in July due to the building owner selling the property. How can I write off the cost of the building materials? I did all of the construction myself so there was no labor paid out to a contractor.
The expenses would be deductible in 2017 as leasehold improvements because you lost the lease. If you had held the lease they would have been depreciated over time. You can use the Miscellaneous Expense category to list the expense.
- If the lease is terminated before the asset is fully depreciated, the balance of the asset is written-off upon abandonment.
For more information, please see IRS Pub. 946 How To Depreciate Property.
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