I have a 1099-G form for a grant to use in building an ADU how does this get entered and where do I enter the fees associated with the grant?

[NAVI2]

I have a 1099-G form for a grant to use in building an ADU how does this get entered and where do I enter the fees associated with the grant?

[Vanessa A]

It depends.  Was this a business grant?  If it was a business grant, then you would enter the ADU as an asset to be depreciated. After entering your business information, you would select Expenses>>Add Expense or Asset>> then continue through to add your building as an asset. TurboTax will walk you through the available depreciation or expensing items based on your answers. 

 If this was a personal grant, then this is income to you which you will enter in the 1099-G area under income and the ADU expenses are not deductible as personal expenses are not deductible.  If you ever sell the property, then you would include the expenses to build as part of the cost basis which is then deducted from the selling prices to lower your profit.

[NAVI2]

No.  It is not a business.  It is a grant from the California Housing Agency to convert a garage to a living space

[NAVI2]

The grant was awared in November 2022 and sent directly to a nonprofit organization to monitor the build.  They charged administration fee as well as escrow fee to maintain the fund in the escrow account and another fee for inspection fee.

However, I don't have access to the fund untill the unit is built. 

1) Do I report this on my 2022 taxes?

2) Can I deduct the fees charged by the non-profit organization?

3) Can I deduct the fees charged by the escrow company as point, etc.?

[MaryK4]

Yes, you must report on your 2022 tax return.  As Vanessa said, if it is not a business you cannot deduct the expenses.  @NAVI2 

[NAVI2]

Thanks for your reply.