My business put a down payment on a home in 2016 but did not purchase until 2017. What do I list this under? Is it a Misc expense?

[Cattlerancher · Accepted solution]

If the home was purchased for use in your business, the down payment would be part of the original cost basis of the home and entered as a depreciating asset in the business when it is place into service of the business (in 2017). So keep track of all your cost, including improvements and repairs for when you begin depreciation in next years tax return.

[kristamanna]

So even though the downpayment was essentially a partial payment on the asset & was in 2016, it should be listed all in 2017's taxes, correct?

[Cattlerancher]

In 2017 you will enter this building/home as an asset to your business. The total cost will include the entire selling price of the home, cost of improvements and repairs even if you have a loan on it. You will depreciate it as non-residential real estate using a recovery period of 39 years. The interview is all built into TurboTax. Each year you will depreciate a small portion of the entire cost as a business expense. If you do have a loan on it, the interest portion of the payment is an expense in your business. So is RE taxes and insurance.