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What can I include to satisfy the substantial improvement test?

Are architectural fees, permitting costs, developer fees and other pre-construction related costs considered additions to basis for the purpose of satisfying the substantial improvement test?


Answers
  • Guy Nicio
    July 15, 2020

    Yes, those costs would qualify.

  • Brad Cohen
    July 15, 2020

    Yes.

  • Matthew Rappaport
    July 20, 2020

    Soft costs are generally capitalized into basis, and they are therefore included in the substantial improvement calculation, except if they are paid at closing and factored into the initial basis.

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