Solved: We built (now live in) a barn with a ~700 sq ft living space on raw land. What improvement expenses (including establishment of electricity & water) are deductible?
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starbuck100701
New Member

We built (now live in) a barn with a ~700 sq ft living space on raw land. What improvement expenses (including establishment of electricity & water) are deductible?

We purchased 50 undeveloped acres 2015 and have a mortgage on the land.  At the beginning of 2017, this was raw land with no utilities, and no access.  We brush-hoged, built a driveway, then began construction early 2017.  We began living at this location in July 2017.  All construction and land improvement costs (aprox $160,000) were paid for out of pocket.  This barn is now our residence. 

Are any of the expenses for improvements and management to the land deductible / depreciable?

Thank you.

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Accepted Solutions
Vanessa
Level 3

We built (now live in) a barn with a ~700 sq ft living space on raw land. What improvement expenses (including establishment of electricity & water) are deductible?

The only thing that would be deductible is your Mortgage Interest, PMI and property taxes.  All construction and land costs are just part of your cost basis for your home and are NOT tax deductible as they are personal expenses.  

If you ever sell your home, then all of these costs will be deducted from your sales price to decrease your taxable profit.  

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1 Reply
Vanessa
Level 3

We built (now live in) a barn with a ~700 sq ft living space on raw land. What improvement expenses (including establishment of electricity & water) are deductible?

The only thing that would be deductible is your Mortgage Interest, PMI and property taxes.  All construction and land costs are just part of your cost basis for your home and are NOT tax deductible as they are personal expenses.  

If you ever sell your home, then all of these costs will be deducted from your sales price to decrease your taxable profit.  

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"

View solution in original post

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