Question

5 yr vacant investment property deductions

Forum|Forum|5 years ago
February 20, 2021
1 reply
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I purchased a home in 2014 to flip it. It was never rented in the time I owned it. Sold it in 2020. Back in 2015 an accountant told me if it's not going to be rented, then I should deduct taxes/materials/expenses etc when I sell the home. That was 5 years ago. Before I do this, does anyone know if I can deduct 5 years worth of stuff in this circumstance?

Not A Product Question

Hal_Al

Employee

Q. Can I deduct 5 years worth of stuff in this circumstance?

A. No.

You may amend going back three years to claim some of those expenses. The deduction for most investment expenses was eliminated starting with tax year 2018. You need to amend 2017 by 4-15-21. Real estate taxes were still deductible all three years. But, all deductions are only itemized deductions. So, if you used the standard deduction, you may not have missed out on anything. Investment expenses (except RE tax) were also subject to the 2% of AGI rule.

The cost of construction materials should be added to your cost basis. They should not have been deducted in previous years.

You didn't ask, but for info on how the sale should be reported, see:

https://ttlc.intuit.com/questions/3399983-tax-issues-regarding-flipping-of-a-house