Can engineering and architecture fees on a home I never built, but would have been my primary residence be tax deductible?

[brettsmith73]

I sold my primary residence in 2017 and have no capital gains on the sale. I purchased a piece of land with the intent of building my primary residence in 2017. To make a very long story short, I was unable to build. I bought the land for cash and can probably break even on it, however I spend $35,000 in architecture and engineering fees for the designs. Is it possible to claim these as deductions?

[Hal_Al · Accepted solution]

You may not take a deduction, but you can add the fees to your cost basis in determining your gain or loss when the property is sold.

Since it was going to be your home, some experts will say you can not deduct a capital loss. I'm of the opinion that since it was never actually your home, you may treat it as investment property and deduct the loss. Capital losses are deducted against capital gains. Only $3000 of excess capital loss may be deducted against other income, the rest is carried forward to future years.

[brettsmith73]

Thank you for the response. Your expertise really helped.