Carry Materials expense to sale of home next year?

[Percy Greyson]

Okay so been talking to a CPA and they are telling me that I can't take a previous year's expenses and apply them to the year a spec home is built because I run on cash accounting.  I want to know what my options are so that the year the home is sold, I don't have a huge tax burden.  It may take me a full year to build a house and if I start it in the spring of 19 and sell it spring of 20 that is 9 months of expenses in 19 that just .... do what?

Here's an example.  Say I start a home in June this year, but sell it May of next year.  Say I have $150k in expenses this year, and will have $100k in expenses next year, and also sell it for $300k next year.  I have no income for this year while I am working on the house, so I have no need for the deductions this year, but I want to take the $150k in expenses this year and apply it to the cost of the home built and sold in May 2020.

How can I do this where I can then go do a remodel job say in June of next year, and maybe start a spec home again in 2021 or 2022, I won't be building spec homes only so I don't think that there is a good method to just 'keep going' and use the start of the new spec homes expenses against the sale of the one previously as that could be a year or two apart.

[Steven Hamilton II]

Honestly, Because either they didn't understand what you were asking(unlikely) they are lazy and haven't taken the time to learn the law. They clearly don't have a clear understanding of basic tax law. I'd highly recommend you look at my postings on Questions to ask an accountant. https://www.biggerpockets.com/forums/51/topics/70447-questions-to-ask-a-cpa

Feel free to reach out on here to ask us accountants for clarification if you run into a major issue.

Keep in mind ust anyone can throw up a shingle and call themselves a tax specialist. Be very weary. This is a 101 topic.