I own undeveloped real estate as an investment. ca...
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jplyons8
New Member

I own undeveloped real estate as an investment. can i deduct any expenses: association dues, maintenance fees, property taxes?

 
2 Replies
AnnetteB6
Employee Tax Expert

I own undeveloped real estate as an investment. can i deduct any expenses: association dues, maintenance fees, property taxes?

You may deduct your property taxes as part of Schedule A, itemized deductions.  The other expenses are not deductible for an undeveloped investment property.  

 

 

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Hal_Al
Level 15

I own undeveloped real estate as an investment. can i deduct any expenses: association dues, maintenance fees, property taxes?

 The carrying costs (e.g.  repairs, insurance & utilities) of investment property are not deductible, staring with tax year 2018. Real estate (property) tax may be deducted on schedule  A, under taxes, without regard to the old 2% rule.

Alternatively, taxpayers can elect to capitalize (add it to your cost basis)  the carrying costs of unimproved and nonproductive real property, real property under development or construction and personal property before its installation or use (Regs. Sec. 1.266-1(b)(1)).  The election is made with the tax return by its due date, including extension, by attaching a statement. You cannot wait until you sell the property, but must make that election each year. Attach the statement to the return and write “Filed pursuant to section 301.9100-2” on the statement. You may add the carrying costs, incurred in the year of sale, to your cost basis. 

Mortgage interest is only deductible to the extent of other investment income and not subject to the 2% of AGI rule,  but can be capitalized. 

 

You cannot amend to claim capitalization. https://ttlc.intuit.com/community/tax-credits-deductions/discussion/is-it-possible-to-amend-taxes-fo...

 

Prior to 2018, carrying costs could alternatively be deducted as investment expenses, a misc. itemized deduction subject to the 2% of AGI threshold. So, filing  amended returns for earlier years is an option.

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