Second Property (not used for investment)

[jk253808]

We purchased a second property this year (not to be used for rental, but to use as a vacation home) and we paid contractors to renovate it.  We sent a 1099-Misc form to the contractor and IRS and need to file it with our taxes.  Turbo Tax said I needed to upgrade to the Home & Business, which I did.  My question is if the money that we paid the contractor counts as a business expense?  We got no income from this property.

[Anonymous_]

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@jk253808 wrote:

My question is if the money that we paid the contractor counts as a business expense?  We got no income from this property.

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No. The money that you paid the contractor is not a business expense since the property was not used in a trade or business, or otherwise for production of income.

You should, however, retain the invoices, receipts, etc., since you can add the cost of the renovation to your basis in the property.

[FangxiaL]

No, the money you paid to the independent contractor is not a business expense as the property is not business-use property. It is considered a personal expense. But you did the right thing to issue a Form 1099 to the independent contractor to make sure he pays his share of income tax and employment tax.