Flipping houses for profit. How to categorize expenses?


B

bkadams01

I began a business of buying and selling houses for profit or use in
rental income. I only have purchased one so far and need to know how
to classify my expenses. For example the costs of appliances,
fixtures, tile, paint, trim, plumbing all work that I did myself to
install, are these able to be deducted as supplies or added to the
cost basis? It would seem like some expenses must be supplies but
where to draw the line? I haven't sold the house yet so I have no
income to claim. The only expense I paid a subcontractor for is
siding and window installation. I assume that would be added to the
cost basis.
 
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A

Arthur Kamlet

I began a business of buying and selling houses for profit or use in
rental income. I only have purchased one so far and need to know how
to classify my expenses. For example the costs of appliances,
fixtures, tile, paint, trim, plumbing all work that I did myself to
install, are these able to be deducted as supplies or added to the
cost basis? It would seem like some expenses must be supplies but
where to draw the line? I haven't sold the house yet so I have no
income to claim. The only expense I paid a subcontractor for is
siding and window installation. I assume that would be added to the
cost basis.

If this is to be your business, buying houses, fixing them up, then
selling them, your house and appliances and paint, etc, are all
part of your inventory.

Inventory is not depreciable.

All those inventory items are part of Cost of Goods Sold.

There's even a handy dandy line on the Schedule C for that.
 

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