Definition of "begins construction"

#3 04-05-2004, 09:48 PM

lawsea wrote:

- quote -

> I would like to deduct mortgage interest and other costs
> related to the construction of a vacation home. I have
> looked at reg. sec. 1.163-10T(p)(2)(5), which discusses
> treating a residence under construction as a qualified
> residence. But I can't figure out at what point
> "construction" begins--is it when you stake the property?
> sign a contract with a contractor?, apply for a building
> permit? first meet with an architect? Can anyone help?
> Thanks.

When the first shovelfull of dirt is moved (or other similar
act).

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#2 04-05-2004, 09:29 PM

Paul A Thomas wrote:
- quote -

> "lawsea" <lawsea[at]comcast.net> wrote

> > I would like to deduct mortgage interest and other costs
> > related to the construction of a vacation home. I have
> > looked at reg. sec. 1.163-10T(p)(2)(5), which discusses
> > treating a residence under construction as a qualified
> > residence. But I can't figure out at what point
> > "construction" begins--is it when you stake the property?
> > sign a contract with a contractor?, apply for a building
> > permit? first meet with an architect? Can anyone help?

> When you first meet with the architect you don't have plans
> to even begin construction, so that's not it (and by the
> way, you probably don't have a construction loan yet).
> At what point did you start making loan payments (even if
> interest only) on a construction loan?
> Probably when the construction contract gets signed would be
> the earliest.
> But I suppose a 'facts and circumstances' test could be used
> to vary that.

You know, what bugs me about these construction loans, is
that they are not reported on a 1098. I'm just waiting for
IRS to try to match up some big ones.

Cheer$$,
Harlan Lunsford, EA n LA

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#1 04-02-2004, 10:02 PM

"lawsea" <lawsea[at]comcast.net> wrote

- quote -

> I would like to deduct mortgage interest and other costs
> related to the construction of a vacation home. I have
> looked at reg. sec. 1.163-10T(p)(2)(5), which discusses
> treating a residence under construction as a qualified
> residence. But I can't figure out at what point
> "construction" begins--is it when you stake the property?
> sign a contract with a contractor?, apply for a building
> permit? first meet with an architect? Can anyone help?

When you first meet with the architect you don't have plans
to even begin construction, so that's not it (and by the
way, you probably don't have a construction loan yet).

At what point did you start making loan payments (even if
interest only) on a construction loan?

Probably when the construction contract gets signed would be
the earliest.

But I suppose a 'facts and circumstances' test could be used
to vary that.

--
Paul A. Thomas, CPA
Athens, Georgia
taxman at negia.net

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04-02-2004, 10:01 PM

lawsea wrote:

- quote -

> I would like to deduct mortgage interest and other costs
> related to the construction of a vacation home. I have
> looked at reg. sec. 1.163-10T(p)(2)(5), which discusses
> treating a residence under construction as a qualified
> residence. But I can't figure out at what point
> "construction" begins--is it when you stake the property?
> sign a contract with a contractor?, apply for a building
> permit? first meet with an architect? Can anyone help?
> Thanks.

At a minimum construction starts when you break ground on
the building site. A meeting just does not cut it.

--
Frederick E. Jorden http://Tax-Accounting-Payroll.com
7825 Midlothian Tpk - 207 Richmond, VA 23235-5247
EMAIL knowtax[at]bigfoot.com
(804) 320-6210 FAX (804) 320-6211

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#-1 04-01-2004, 12:50 PM

I would like to deduct mortgage interest and other costs
related to the construction of a vacation home. I have
looked at reg. sec. 1.163-10T(p)(2)(5), which discusses
treating a residence under construction as a qualified
residence. But I can't figure out at what point
"construction" begins--is it when you stake the property?
sign a contract with a contractor?, apply for a building
permit? first meet with an architect? Can anyone help?
Thanks.

<< -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << ------------------------------------------------->

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