Purchasing a residential home to use as office and then converting to personal use

[M-MTax]

Everyone pays taxes on the principle part - but not the interest part. Don't see why that's news to anybody. 

How do you figure everyone pays taxes on the principal part? The loan balance is taxable? That would be news to everyone. Maybe you should elaborate with an example. Here's mine: you take out a business loan (or home mortgage) for $250k and pay interest of $10k for the tax year.....you can potentially deduct the $10k in interest you paid but are NOT taxed on the $250k. Are you talking about something else? 

[Carl]

You take out a home loan for $250K. In the first year you make payments totaling $20K, of which $15K of those total payments are interest. The 15K of interest is deductible. The $5K you paid towards the principle balance is not deductible.

[M-MTax]

You take out a home loan for $250K. In the first year you make payments totaling $20K, of which $15K of those total payments are interest. The 15K of interest is deductible. The $5K you paid towards the principle balance is not deductible.

EXACTLY! The $15k of interest is deductible. The $5k paid toward principal is NOT deductible BUT it is also NOT taxable......big difference.

[Critter-3]

You cannot deduct the principal portion of the payment however that is what depreciation is all about ... that is how you can take a portion of the principal as a deduction of depreciation  over the number of years required.   

[M-MTax]

Depreciation is a cost recovery system that allows recovery of basis over a specified number of years. The principal portion of a loan has nothing to do with that system. You don't even need a loan or to make a principal payment to take an annual depreciation deduction....just property that is subject to depreciation.