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The Tax Impacts Of Capitalizing Versus Expensing Costs Of Real Estate – Tax

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Individuals with real estate businesses often expect to deduct
business-related expenses for tax purposes. But those tax
deductions might not be a guarantee. Many real estate development
costs are required to be capitalized and added to the cost of the
building. In this case, there are additional rules to determine if
building costs qualify for depreciation or deductible expenses due
to the type of expenses. In other cases, you may need to consider a
cost segregation study to separate costs into categories. This
article summarizes the range of tax rules that apply to real estate
and its component costs.

REAL ESTATE DEVELOPMENT COSTS

The Tax Cuts and Jobs Act of 2017 (TCJA) was the most recent
discussion of real estate development. Real estate developers need
to consider when to capitalize and when to expense costs incurred
before, during and after production. Additional analysis may be
required to determine the recognition of costs,…

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