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New shop build - can it be deducted?

Discussion in 'Business Operations' started by queen of spades, Mar 12, 2011.

  1. theguynextdoor

    theguynextdoor LawnSite Senior Member
    Messages: 275

    Just curious, why wouldn't you expense it?
  2. TMlawncare

    TMlawncare LawnSite Bronze Member
    Messages: 1,199

    You wouldn't what? Count this as an expense? Depreciate it? What?
  3. GreenI.A.

    GreenI.A. LawnSite Silver Member
    Messages: 2,131

    I was told just the oposite by my accountant. When you personally own something and rent it to your business it throws up red flags to the IRS and could up your chances for an audit for both the business and your self. He said the same for claiming a room in your house. If you get audited and the IRS finds that your kids bike is in the shop or anything else personal then they can consider it mixed use and you can be fined, or foced to pay back taxes if you have been claiming it for years and you just finally got audited.

    He said it is safer to claim the portion of it that you can on your person taxes as an improvement to your home property instead. He also told my that the only time it is safe to claim building/office expenses is if it is a mortgage in the companies name or a lease, in which you do not personaly own the prop. He did say that if you owned the property under another business name such as "XYZ properties" then you should be safe
  4. New2TheGreenIndustry

    New2TheGreenIndustry LawnSite Senior Member
    from GA
    Messages: 918

    I guess it's a matter of who you talk to. My guy advised me against claiming the shop as he said that was a red flag. He has been doing taxes for 30 years, and works with a lot of businesses locally, so assume he knows what he is talking about.
  5. JB1

    JB1 LawnSite Fanatic
    Messages: 5,903

    it was explained to me in depth, more than I'm gonna explain here, bascically it threw up red flags, don't listen to anybody here, go consult a professional tax person instead of lawn people.
  6. GreenI.A.

    GreenI.A. LawnSite Silver Member
    Messages: 2,131

    Why not ask the question here? don't you go to your accuntant and ask about questions about lawn care? :laugh::laugh:
    But yeah you are right, people have to just use the info here as a rough idea. It is helpful for a guy reading this to see a few of our comments and maybe get a few ideas of questions he should ask his accountant. This also holds true with many of the business aspects on lawnsite whether it is accounting, liceansing, insurance etc.. One thing that is legal in one state may not be for us in another state. Whats said here whould be taken with a grain of salt and just used to give the person ideas of who and what to ask
  7. snomaha

    snomaha LawnSite Bronze Member
    from midwest
    Messages: 1,192

    Have your attorney form a LLC that owns the real estate.
  8. bohiaa

    bohiaa LawnSite Fanatic
    Messages: 5,220

    it may get touchey:

    as you knwo or should. NEW is tax deduction, repair is NOT....

    I think if you built it your self the answer is NO. but if you contracted the work out then it's a YES.
  9. meets1

    meets1 LawnSite Gold Member
    Messages: 3,850

    Contracted, built yourself, deduction, taxes, utility cost, everything can be written off somewhere, somehow.

    You own building - rent it to the business.

    You own building - capital expense, 39.9 yrs decprieation (in my state at least) a few kick backs if you are green, you may deduct property tax, utility charges, upkeep such as add a load of gravel or laid concrete - but if bill is large amount that concrete is itemized over a course of x years.

    Do what can. Talk to a pro.
  10. TMlawncare

    TMlawncare LawnSite Bronze Member
    Messages: 1,199

    If you build or have a new facility built for your company, its tax deductible. When the local contruction company builds a new headquarters they depreciate it. When Walmart spends several million on a new store, they depreciate it. When Walgreen adds a new store, the depreciate it. When the local dentist has a new office built for 700k do you think they don't claim this massive investment on their taxes? If you have a legit business and you build a facility just for your business, its a business expense. There is no red flag if the facility is used only for business purpose.

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