Investment Property Expenses

If my husband and I expect us to sell our property investment, bought in 2006, before deduction of our fees? We do not know if we should file personal expenses on our tax forms now or on our forms of business tax when we sell. My husband has his own renovation company and personally does all the work on our investment property which we bought to "flip".

Thank you

MR

Investment expenses are generally deductible only to the extent of investment income (ie if you had no income from investments, capital expenditure can be deducted). If the investment property you are talking about is property (house), then in general expenditures to rehabilitate the house so you can return it must be ordered between repairs and capital improvements. In both cases, costs should be deducted when you sell the house, thus reducing the amount of the gain on the sale of the house which is taxable. Repairs would be deductible as an expense of sale (getting the house ready for sale). Capital improvements, such as a bathroom or kitchen finishes, etc. would be added to your cost basis in the property.

Are you turning a house, the cost of improvements to adjust the basis of ownership and therefore the gain on the sale.

If it is a legitimate company, other costs and expenses are borne by the company in Appendix C.

If this is a new company and that these costs represent start-up costs must be capitalized for 2006, but you can use to reduce income in future years once you start turning a benefit to the company.

I suggest you consult with a CPA to get yourself pointed in the right direction. You have tax considerations that are outside the mainstream and business issues that you need guidance and a CPA is best qualified to help you around.