1. Pre-acquisition costs related to a specific property that the investor is actively working to acquire and for which they can obtain financing. There are several accounting methods available depending on two factors. 1. The collectability of the sales value; and 2. The seller’s involvement in the property after the sale.
2. Project costs directly related to the acquisition, construction, or development of real estate. Some of these include:

• Property purchase price
• Construction and demolition costs
• Property taxes and insurance costs incurred during construction
• Construction crew fees and equipment depreciation costs

3. Interest from financing for development projects may be capitalized when it is directly related to a project and incurred during the development period.
4. Selling costs that are expected to be recovered or those that are required for regulatory approval of the property sale.
5. Some rental costs can be capitalized if they are related to future operations and they are expected to be recovered through future rent revenue.

Generally speaking, most other costs that do not relate to a specific property, are outside of a project development period, or are for administrative purposes are to be expensed as incurred.