Business assets

[528 designs]

Hi, I have a small business. I use the home office deduction. In 2020 I built a workshop to use for my business (in addition to the home office). I understand that this is a capital asset. Hiwever, I can't seem to figure out which choice within business assets to choose. I am using TurboTax Hime and Business. None of the descriptions seem to fit. Real Estate improvements specifies intefior improvements (like electrical, etc) but there doesn't seem to be a choice for the entire building being built. Anyone know??

[ColeenD3]

You will have to depreciate it separately. Since it is a building, not an improvement, it will also be depreciated 39 years.

Enter the asset in the depreciation section of Schedule C.

[528 designs]

Right, but the 3 categories are nonresidential real estate (which this is still residential) qualified improvement property (improvements to the interior of a structure) or specific qualified improvements ( roof, heating and air,etc).  None of them fit, so do I just choose the first one because it is closest? Or do I break it up by the building shell, then list the other parts like the roof and systems seperately?

[528 designs]

Plus, if I call it non residential, it get's depreciated over 39 years....for a $58,000 expense. Any way to maximize my deduction for that to less than 39 years?

[Irene2805]

Enter the new structure as a home office (you can have more than one home office).  You can indicate in the interview that the home office "is a separate structure."  

[528 designs]

Right, thag will cover utilities and such, but the actual cost of building it still directs me back to business assets

[ColeenD3]

It is nonresidential real property. You don't live in your workshop. It is 100% business use.

1. Nonresidential real property. This is section 1250 property, such as an office building, store, or warehouse, that is neither residential rental property nor property with a class life of less than 27.5 years.

[528 designs]

Ok, I get that, but can I tell turbo tax to depreciate it over 27.5 years instead of 39?  Otherwise I get virtually no deduction for all the money we spent!

[Irene2805]

No -- According to IRS Pub. 587 - Business Use of Your Home  "...you must depreciate the business part [your home office] as nonresidential real property under MACRS. Under MACRS, nonresidential real property is depreciated using the straight line method over 39 years."  [pp. 7-8]