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posted Jun 3, 2019 11:35:52 AM

How can I write off the construction material costs for an office which was built out in January but the lease was lost in July?

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.

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Expert Alumni
Jun 3, 2019 11:35:53 AM

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.