# Need Advice on Spec. Home tax deductions



## arnldmtman (Jun 1, 2005)

Can anybody tell me how to take the proper tax deductions on the building and selling of a spec. home. I'm doing my taxes myself this year as my Accountant of years has just passed away. I know this wont be easy. 
Do you know of any publications on the deductions for this type of write-off?
Anything will help.
Started building in 06
finished in late 07
Sold in 08:thumbup:
Thanks


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## Framer53 (Feb 23, 2008)

arnldmtman said:


> Can anybody tell me how to take the proper tax deductions on the building and selling of a spec. home. I'm doing my taxes myself this year as my Accountant of years has just passed away. I know this wont be easy.
> Do you know of any publications on the deductions for this type of write-off?
> Anything will help.
> Started building in 06
> ...


Sorry to hear about your accountant.

Might I suggest you go to another acountant and let the pro handle it. I have had college level accounting and I won't do this, laws change and you need the expert!:thumbsup:


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## CookeCarpentry (Feb 26, 2009)

Definitely let a qualified accountant handle it.

I too have college level accounting as well as a bachelor in business management and this is one area best left to the professionals.

A good accountant, who properly prepares your returns, is worth more than his or her weight in gold (and certainly worth whatever he/she is going to charge).


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## samccard (Aug 17, 2007)

I would suggest finding a new accountant as well. I imagine it will save you time and money.


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## thom (Nov 3, 2006)

Assuming you only built one house and completed it this year, this is very simple. Do a P&L.

List every direct cost (materials and labor)
indirect cost (insurance, phone, mileage)
land cost
sales costs
marketing costs
closing costs

Then subtract the total of all those costs from your sales price and you have your taxable income. 

You will need to include an actual listing of each of the categories, the breakdown goes on a separate page that ties to the "other expenses" line.


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## ottagosoon (Nov 4, 2008)

*Get an accountant*



> List every direct cost (materials and labor)
> indirect cost (insurance, phone, mileage)
> land cost
> sales costs
> ...


I do not think you can do that. But I could be wrong. 
When I built a spec home I could not take any deduction. It went down as "Work in Progress" The cost was not put against our cost of other job nor could I put a value on the spec house and apply the cost against it. I wouldn't want to do that any way. I would be paying taxes on profit I haven't made yet.
But that is why I have an accountant. When my first one retired I found another one.

The best one was when I made 10K in the stock market and had to put the whole amount on my taxes as income for that year. But when I lost 10K, I could only take something like 3500 dollars a year off:w00t:. it took 3 years to write off the lost. That is the kind of things an accountant knows.
Get one. don't listen to me. arty: I wear to may hats as it is.


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## spechomes (Dec 15, 2009)

*Speculative Builder Tax*

Speculative builders are subject to real estate excise tax on the selling price of the land along with all attachments including buildings, roads, and other structures. The sale of real estate is not subject to the B&O tax or retail sales tax.

A speculative builder is the consumer of all material incorporated into the real estate. A speculative builder may not use a resale certificate to purchase materials used in speculative building. Any construction contractor hired by a speculative builder is a custom prime contractor for tax purposes and not a subcontractor. Hence, any contractor performing construction services for a speculative builder must charge sales tax on the total contract price.

When a speculative builder sells or contracts to sell property upon which there is a building under construction, all construction completed subsequent to the date of such sale or contract constitutes custom prime contracting.

The "retail sale" does not take place until the purchasers have the "right of possession" to the real property being constructed. Typically, the right to possession is transferred on the date of closing the property conveyance. Therefore, retail construction on what was originally a speculative house does not occur until after closing.

Hope this helps. For more information try Googling "Spec Home Rules" and visit the IRS website...


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## Anti-wingnut (Mar 12, 2009)

spechomes said:


> Speculative builders are subject to real estate excise tax on the selling price of the land along with all attachments including buildings, roads, and other structures. The sale of real estate is not subject to the B&O tax or retail sales tax.
> 
> A speculative builder is the consumer of all material incorporated into the real estate. A speculative builder may not use a resale certificate to purchase materials used in speculative building. Any construction contractor hired by a speculative builder is a custom prime contractor for tax purposes and not a subcontractor. Hence, any contractor performing construction services for a speculative builder must charge sales tax on the total contract price.


The OP was from California, are these California laws you are quoting, or are you clogging this thread with laws specific to you, in Texas? If so, you are contributing nothing but static.


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