tax write offs for new house not finished/rented?

[Kevin Macdonald]

Newbee, who needs tax advice. I am building a new house (old house which was never finished) with the intention to rent it out for years. I am funding the project with private money until it is complete. When done will get a standard 30 year mortgage with a cash out to pay back what I have put into the project.
From what I think I understand is the costs to build the house I need to deduct over 27.5 years or something like that. So the costs I have spent so far towards building the house are (blueprints, permit fees, septic/well costs, labor/materials). Can I deduct any of these cost when I do my taxes in a month for 2013 or do I have to wait until the house is done and rented? I bought this house 12/28/2012 so I have had the house for almost a year and I have at least 4 months left before it will be completed/rented.

Second question, how about costs I have spent that don't really have anything to do with building the house (interest paid on private money used to fund project (HELOC on personal home), community just had roads redone so each home owner had to pay $2,000, property taxes (I paid all of 2013 taxes, and had to pay half of 2014 taxes already). Can I deduct these costs on my 2013 taxes?

Third question, When I did my 2012 tax returns I did not consider any of the closing costs I paid when I purchased the property (title search fees, transfer fees, real estate broker fees, etc…). Can I somehow write these off on my 2013 taxes or is it too late?

Final question, I have always done my own taxes because they were pretty simple using turbo tax, but I also never had an investment property. Since I just have this one property going on should I seek a professional CPA, or can this be done simply? If I should get a CPA should I look for one that specializes in real estate?

Thanks

[Steven Hamilton II]

Originally posted by Kevin Macdonald:

Newbee, who needs tax advice. I am building a new house (old house which was never finished) with the intention to rent it out for years. I am funding the project with private money until it is complete. When done will get a standard 30 year mortgage with a cash out to pay back what I have put into the project. From what I think I understand is the costs to build the house I need to deduct over 27.5 years or something like that. So the costs I have spent so far towards building the house are (blueprints, permit fees, septic/well costs, labor/materials). Can I deduct any of these cost when I do my taxes in a month for 2013 or do I have to wait until the house is done and rented? I bought this house 12/28/2012 so I have had the house for almost a year and I have at least 4 months left before it will be completed/rented.
Second question, how about costs I have spent that don’t really have anything to do with building the house (interest paid on private money used to fund project (HELOC on personal home), community just had roads redone so each home owner had to pay $2,000, property taxes (I paid all of 2013 taxes, and had to pay half of 2014 taxes already). Can I deduct these costs on my 2013 taxes? Third question, When I did my 2012 tax returns I did not consider any of the closing costs I paid when I purchased the property (title search fees, transfer fees, real estate broker fees, etc…). Can I somehow write these off on my 2013 taxes or is it too late?
Final question, I have always done my own taxes because they were pretty simple using turbo tax, but I also never had an investment property. Since I just have this one property going on should I seek a professional CPA, or can this be done simply? If I should get a CPA should I look for one that specializes in real estate?

Thanks

@Chris Martin ,

Thanks for the tag.

@Kevin Macdonald ,

You will be able to deduct the property taxes and the interest as investment interest on your return.

Most of those costs will need to be depreciated. Now, since you are building you are in the perfect situation to use Cost Segregation. That means deducting each of the components of the house by their applicable depreciable period.

This means. Driveway other land improvements over 15 years. Cabinets and vanities etc over 5 years. Furnace, water heater, ac each separately over 27.5 years. Flooring over 5 years. etc.

Here is a chart of such items.

Type of Property	General Depreciation System
Computers and their peripheral equipment	5 years
Office machinery, such as: Typewriters Calculators Copiers	5 years
Automobiles	5 years
Light trucks	5 years
Appliances, such as: Stoves Refrigerators	5 years
Carpets	5 years
Furniture used in rental property	5 years
Office furniture and equipment, such as: Desks Files	7 years
Any property that does not have a class life and that has not been designated by law as being in any other class	7 years
Roads	15 years
Shrubbery	15 years
Fences	15 years
Residential rental property (buildings or structures) and structural components such as furnaces, waterpipes, venting, etc.	27.5 years
Additions and improvements, such as a new roof	The same recovery period as that of the property to which the addition or improvement is made, determined as if the property were placed in service at the same time as the addition or improvement.

Property taxes go on Schedule A. Investment interest until it is rented is deducted on Form 4952. The closing costs would not have been deductible unless it was rented in that year.