New studio construction.

[rasmith2024]

Hi, my partner and I are in the process of building a free standing studio/work space on our property and want to know if and how we can deduct the building cost expenses. We are both self-employed creatives and the studio will be divided equally; we are also sharing the costs equally between the two of us. The studio will not be used as a airbnb, solely as workspace. Thanks

[AnnetteB6]

Since you are both self-employed and most likely filing Schedule C for your business income and expenses, the new studio/workspace could be considered either a home office, or simply an Asset to be depreciated for your businesses.  

Either way, you will each depreciate half of the cost of the building on your respective Schedule Cs.  The depreciation will start when the building is completed and put into service.  

[rasmith2024]

OK, thanks. So to be clear, can we deduct any of the building expenses spent in 2023 as business expenses?

[RobertB4444 · Accepted solution]

Since the studio is not yet completed then no - you can't.  The total cost of the studio will be bundled up and called "Studio expense" or something like that.  Once it is finished.  then you and your partner will depreciate that cost over several years or - if you have sufficient income - take an accelerated deduction for it on your 2024 return(s).  But new construction is not a deduction until it is completed.

@rasmith2024