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Updated over 6 years ago,
Deduct construction cost from personal income (for tax purpose)?
Hello Biggerpockets community,
I am newbie in Real Estate. I just bought a house (in California) under my name using traditional bank loan (so no LLC or Corp). My thought process is that I will fix-up the house. If the market is good, I will sell it. If not, I can live in the house as I need a place to stay anyway.
If I sell the house, how can I deduct construction cost from my personal income? For example, my purchase price is $A, my construction cost is $B, and my sell price is $C. My personal income should be $C - ($A + $B), and I should be taxed on this profit. (and NOT $C - $A)
Since I don't have an LLC, the house is under my name, how can deduct $B from my personal income? It will be a misfortune if I can't deduct construction cost $B ...
I appreciate all of your input and advice since this is my first house ever!
Thank you very much,
Kathy L.