Hello all,
I recently completed and flipped a home with a profit of about 40k. My question whether I can apply furniture I purchased for the home(but did not stay after sold) as something I can write off. Heres a breakdown.
purchase - 70k
rehab work - 15k
misc(phone,gas) - $350
furniture - 2k
Selling price - 132k
Would the amount I have to pay taxes on Selling Price - (purchase+rehab+misc+furniture) ??
Since you kept the furniture, what did you do with it?
you are attempting to calculate your cost basis.
if the furniture did not convey with the sale, I would have a hard time justifying why it shoudl be in the cost basis. I suppose you could add to the cost basis the adjust valeu of the furniture at the time is was removed form the property (if you used it for staging purposes). As a wild guess, I would say even if it was only a few months old, it value at the time of the sale would be ~50% (??) of it new purchase price as furniture losses it value as soon as it leaves the store. You could include this as a selling cost.
I disagree with aak. The furniture did not convey with the property. I would not include the furniture in the profit equation.
If it was me, I would not include it in the cost basis either, but was suggesting one possible avenue/train of thought. Such a situation probably warrent consultation with a tax professional is one is adamant about trying to add that expesne to the cost basis.
It appears there may have be a legitimate cost incurring related to the purchase and use of the furnitue to sell the property. The real question is if it worth the hassle to try and make it part of the cost basis.
Cost basis? No, because the furniture did not convey with the property. The cost basis of the property sold does not include the furniture. If you want to make an argument for some staging expense such as hired labor to install and remove the furniture, I can accept that and include it in the cost of goods sold, but I can’t see my way clear to include any portion of the cost of the furniture nor any depreciation expense for it.
The real question to be answered is what did Mazoo do with the furniture. Once he has answered this question, we can try to determine whether he has a personal expense or a legitimate business expense.
Hello All,
I appreciate all the replies. The furniture was used for staging home. I used an interior designer that made it very easy to sell my house through her creative design work. But that is true I still have the furniture and again this was used primarily for staging home.
Thanks
What are you doing with it now? If you still have it and are not using it, what do you plan to do with it in the future?
Not using it right now… I’ll probably use it for the next flip
If you intend to use the furniture to stage your next flip, then consider capitalizing the cost of the furniture and take a depreciation expense on your business tax return.
Consult your tax advisor/CPA for specific details.
Simple and correct.