Question

barn construction costs as an expense

Forum|Forum|6 years ago
March 29, 2020
1 reply
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I have a small hobby farm that supplements my income. I have built a pole barn with 1/2 of the construction cost in 2019 and the other half occurring in 2020. 51% of the barn will be used for my farm. All my taxes on the farm thus far have used cash method (in-year accounting, never used depreciation, etc).

Can I claim 51% of the 2019 barn construction cost as an in-year expense for my 2019 taxes? I would then want to claim 51% of the 2020 barn construction cost on my 2020 taxes.

J

JamesG1

The barn will be a property improvement and property improvements must be capitalized and depreciated over time. They are not to be expensed in the current period. They have to be depreciated over more than one year.

Depreciation starts on the first day the business is open, or the first day the property improvement is placed in service, whichever is later.

Your construction costs in 2019 are not deductible in 2019. When the barn is completed and placed in service, you can begin depreciating the property over several years.