Who acquires land, does this either in the built or in the undeveloped condition. If an object is still on the respective land and has to be torn off first, this usually involves considerable demolition costs. How these are to be treated for income tax depends primarily on the planned use of the property and the intention of the acquirer.
Principle 1: What are demolition costs in the tax sense?
Demolition costs include all expenses necessary for the complete or partial removal of a property and the outdoor facilities. The extent to which they occur plays no role here. The only decisive factor is the fact that the costs are incurred for the removal of the construction plant and not for the construction of a new building. Classically, the following items belong to the demolition costs:
This article does not replace tax or legal advice in an individual case. Facts, current law, jurisdiction, documentation and implementation remain decisive.