mortgage interest on investment properties

#1 03-21-2005, 06:02 AM

eab320[at]yahoo.com wrote:

- quote -

> May I tap into your combined tax wisdom for a moment with a
> few quick questions?
> If an S-corp buys one or more properties during the year,
> with the express purpose of fixing them up and selling them
> at a profit the next year, is the mortgage interest deducted
> in the current year, or is it accrued and added into the
> cost basis of the property when it is sold the following
> year?
> What about the real estate taxes?
> If either need to be deducted in the current year, where on
> the 1120S are they deducted?

Add to basis.

ChEAr$,
Harlan Lunsford, EA n LA
Sun 20 Mar 2005

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03-21-2005, 05:42 AM

<eab320[at]yahoo.com> wrote

- quote -

> If an S-corp buys one or more properties during the year,
> with the express purpose of fixing them up and selling them
> at a profit the next year, is the mortgage interest deducted
> in the current year, or is it accrued and added into the
> cost basis of the property when it is sold the following
> year?
> What about the real estate taxes?

I would take the interest and taxes in the year paid (pay
attention to the tax adjustments on the HUD-1 for purchase
and sale).

- quote -

> If either need to be deducted in the current year, where on
> the 1120S are they deducted?

There are line items specifically for taxes and interest.
Use them.

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

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#-1 03-18-2005, 12:42 PM

May I tap into your combined tax wisdom for a moment with a
few quick questions?

If an S-corp buys one or more properties during the year,
with the express purpose of fixing them up and selling them
at a profit the next year, is the mortgage interest deducted
in the current year, or is it accrued and added into the
cost basis of the property when it is sold the following
year?

What about the real estate taxes?

If either need to be deducted in the current year, where on
the 1120S are they deducted?

Thanks so much for your advice!

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

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