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The other day DW and I bought some land. We're going to build a house on it (in about two years or so). But at this point it's not clear whether that house will be our primary residence or whether we will use it as a rental.

As we get the land ready to build on--clear it of trees, grade it, etc., and as the house itself is under construction, what sort of expenses should we keep track of?



The short simple answer is "Everything". Anything that goes into preparing the lot counts as an improvement that raises the basis for the property. Ultimately the higher basis will reduce any capital gains you may have to pay way down the road when you sell. I am in the same process for some land I bought four years ago. I have a spreadsheet that has entry for everything including clearing, undergound electric service, dirt work for barn pad, well, barn construction, well house, rent for trenching machine to run irrigation pipe as well as all the PVC and connectors to put in the system, culvert at street, crushed stone for driveway, mail box, and much more... just to give you an idea..
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