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cherylpoppel
New Member

Where do i put the deduction for building a new building for my business?

 
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ThomasM125
Expert Alumni

Where do i put the deduction for building a new building for my business?

@msbackwoods You would add most of the costs you mention to the cost of the building. The land associated costs would be entered as land improvements when you enter the cost of the land.

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7 Replies
DawnC0
Intuit Alumni

Where do i put the deduction for building a new building for my business?

A building used for business purposes is a capital asset and is depreciated over it's useful life. The costs of construction are not a deduction, they are the cost basis for depreciation. Depreciation begins when the asset is entered into service. 

When Does Depreciation Begin and End?

You begin to depreciate your property when you place it in service for use in your trade or business or for the production of income. You stop depreciating property either when you have fully recovered your cost or other basis or when you retire it from service, whichever happens first.

Placed in Service

You place property in service when it is ready and available for a specific use, whether in a business activity, an income-producing activity, a tax-exempt activity, or a personal activity. Even if you are not using the property, it is in service when it is ready and available for its specific use.

Please see the following: http://www.irs.gov/publications/p946/ch01.html#en_US_2013_publink1000107308

A capital asset is an asset that benefits your business for more than one year. Most businesses will need capital assets such as equipment, a car, computer and office furniture. Capital assets must be depreciated and cannot be treated as an expense in the year they are acquired or put into service.

To enter your capital asset (Real Estate Property) into TurboTax, go to the Business Assets section, which is located under Business Income and Expenses.  Screen image attached.  

Simonapopa1630
New Member

Where do i put the deduction for building a new building for my business?

I have an S copropration. I made a new investment by constructing a new building in year 2019. How much of the total cost of the building I can deduct in my 2019 income tax return and where this amount should go in the tax return schedule?

DavidS127
Expert Alumni

Where do i put the deduction for building a new building for my business?

You deduct the cost of your building and the key building systems over time, through depreciation.  Enter the cost of the building and each of key building systems as Assets in the section Federal>>Deductions>>Depreciation of Assets.  While you are entering the assets, TurboTax will advise you of any options you have to increase your depreciation deduction in 2019.

 

Note that the IRS requires the building and its structural components to be depreciated separately from the key building systems within that building.  The key building systems are the plumbing system, electrical system, HVAC system, elevator system, escalator system, fire protection and alarm system, gas distribution system, and the security system.

 

See the IRS website at this link for a summary of the IRS regulations for your building, and see IRS Publication 946 at this link for the complete IRS rules on depreciation.

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SimonBlanco949
New Member

Where do i put the deduction for building a new building for my business?

Good day!  I have a similar scenario:  I have a property that I am developing for short term vacation rentals. I am trying to figure out what I can deduct. There are three homes.

 

1. One we live in.

2. One we have rented out for a couple years now (as a short term rental)

3. and one thats under construction (future shot term rentals).

 

Thanks in advance!

KristinaK
Expert Alumni

Where do i put the deduction for building a new building for my business?

These three scenarios have different tax treatments.

 

1. If you itemize, you can deduct mortgage interest, property taxes, and PMI (if applicable). It's best to enter the information into TurboTax and have the software figure out whether a Standard or an Itemized Deduction is best for you. 

 

2. You will record income and expenses from Rental activity on a Schedule E (unless you provide services to your tenants). 

 

3. You will add up all the costs of construction and enter it in the software as a fixed asset in the year when the property is available for rent. 

 

msbackwoods
New Member

Where do i put the deduction for building a new building for my business?

Where do you enter this data?  
I am at NonResidential Real Estate Commercial Property
Cost ( I put total cost of building and land)
Cost of Land I entered actual cost of land
I have plumbing and electrical expenses- for the construction.   WHERE do I put this category and the values?  I've read that the key systems need to be separated but don't know if I list Plumbing as an asset with figures
Electrical as an asset with figures
This was a brand new construction for  a commercial building.  I have building materials, labor and expenses for leveling parking area and laying down gravel for driveway .  Any details as to where to put these expenses would be appreciated. 

ThomasM125
Expert Alumni

Where do i put the deduction for building a new building for my business?

@msbackwoods You would add most of the costs you mention to the cost of the building. The land associated costs would be entered as land improvements when you enter the cost of the land.

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