Tax Consequences of Launching a Real Estate Venture

Authors

Larry Witner, Bryant University
Eugene Amelio, Bryant University

Document Type

Article

Comments

Published by West Information Publishing Group in Real Estate Law Journal Volume 23, issue 4, Page 345.

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Keywords

Timing;Tax deductions;Startup costs;Real estate;Internal Revenue Code

Publisher

West Information Publishing Group

Publication Source

Real Estate Law Journal

Abstract

Launching a real estate venture may entail start-up costs, organization costs, syndication costs, capital expenditures, and business expenses. Under the general rule, start-up costs are capitalized and not amortized (deducted). However, if the entity files the proper election, such costs may be amortized (straight-line) over 60 months or more. Only start-up costs paid or incurred before business begins are eligible for amortization. In general, costs are incurred when: 1. goods or services are received, and 2. there is an obligation to pay for them. Capital expenditures are capitalized and eligible for depreciation, amortization, or depletion, assuming the asset is used in business or an income-producing activity.