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Updated about 1 year ago on . Most recent reply

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AJ D.
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11
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Cost Basis on New Construction

AJ D.
Posted

How would you account for appreciation/upgrades to a new construction build from a Cost basis perspective?

Ex) Original build was estimated to be $500k, however during the build upgrades were selected such as windows, larger patio, upgraded floors, etc.

Option A - Would you have the property reassessed after completion and use the new assessed value for cost basis? 

Option B - Use the original amount of $500k, and add the dollar value of the upgrades (windows, floors, etc.) 

Appreciate any help and if there is a 3rd option that would be great to know! Ideally, I want to make it as efficient as possible while still being compliant from an accounting/IRS perspective. 

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Replied

I would use the actual costs of the build. If it's a new construction you should know cost of everything. 

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