How to Expense New Windows in Home Office in 2022?

[CTWalters]

I replaced rotted windows in the dedicated home office room this year and am uncertain whether and how to get credit for this repair/improvement.  I've used the home office "asset list" in the past for such things to depreciate or take as expense, but this year the program seems to be set up differently - only supporting commercial building assets?    The window value is less than 2% of the home value.  Any guidance would  be helpful.

Thanks!

[BrittanyS]

Replacing the windows in your home would be considered an indirect expense for the home office.  The IRS has two categories for home office expenses:

1. Direct Expenses - Expenses that only benefit the business
2. Indirect Expenses - Expenses that benefit the business and your home,

To claim an indirect expense, you must calculate the value related to just the business.  For example, if your home office use is 15% of your home, you can claim 15% of the window repairs for the home office.  

To enter this into TurboTax Online, follow these steps:

1. Click Wages & Income
2. Click edit next to Self-Employment income and expenses
3. Click Edit next to the business name
4. Click Edit next to the home office or start if you have not started yet
5. proceed through the interview questions for the home office
6. Click No; I want to take actual expenses
7. Choose the Guide Me option and click continue
8. Enter actual expenses
9. Click No. All of my expenses apply to the entire home
10. Enter windows under the "Enter repair expenses."

[CTWalters]

Thanks.  Is this the case even if the windows are only on the room that is the dedicated home office?

[JohnB5677]

Yes, you can deduct windows that are exclusively used in the home office as a direct expense.  Windows added to other areas of the house would not be included in the home office.

"Deductible expenses for business use of your home include the business portion of real estate taxes, mortgage interest, rent, casualty losses, utilities, insurance, depreciation, maintenance, and repairs." 

Topic No. 509 Business Use of Home

[CTWalters]

Thank you for this perspective on it. 

Now for the mechanics of doing it - I’m not sure how to take the expense in 2022.  It’s about $6000 and I used to be able to put an item on my asset list and use Section 179 to expense it. Do you know the steps I would follow in the program this year - question look different - 2022 Home &Biz for Mac?

thank you!!

[BrittanyS]

For Home and Business Desktop you can follow these steps to get to the home office deduction portion:

1. Click Business
2. Click I'll choose what I work on
3. Click Update next to Profit or Loss from Business
4. Click Edit next to Business Name
5. Scroll down to Business Expenses and click visit all
6. Click continue until you see "Home Office Summary"
7. Click Add a Home Office or edit next to one that has been entered"
8. Continue through the entry until you see "How do you want to enter home office expenses for 2022" click I'll enter actual expenses with the office expenses expert
9. Continue Until you get to There are two types of home office expenses and click "No, all of the expenses apply to the entire home"
10. Continue through until you get to "Enter repair expenses" (you can enter the $6,000 under entire home repairs and maintenance included)  TurboTax will do the percentage calculations for you.
11. Continue through the remainder of the interview questions

This walkthrough was done with the Windows version of TurboTax Home and Business, however, it should be close enough to follow on the mac software as well.

@CTWalters 

[CTWalters]

@BrittanyS  Helpful instructions… thank you.

you and @JohnB5677 have differing views on whether I can take these windows (all part of the specific home office room) as a direct versus indirect expense.  How do I overcome the differing views?

thanks for the input - both of you!

[GeorgeM777]

The ambiguity may center around the issue of whether your window replacement benefited only your home office or if the benefit was to your entire home which includes your home office.  Based on your initial post, it appears that the replacement windows were limited to the home office.  If that is the case, then the direct expense analysis would apply, and you can deduct the cost of the replacement windows as a business expense.  

Whether you can deduct the entire expense or must depreciate it will turn, as you note in your post, on whether the window replacement was a repair or an improvement.  Given that cost of the window replacement is relatively low compared to the value of the home, it would appear that you have a reasonable argument in favor of characterizing the window replacement as a repair versus an improvement.

@CTWalters 

[JohnB5677]

You can confirm the deduction with this IRS publication.

Publication 587 (2022), Business Use of Your Home  Page 6

Table 1. Types of Expenses 

Expense Description Deductibility 

• Direct 
  • Expenses only for the business part of your home.
  • * Examples:
  •  Painting or repairs only in the area used for business.

 Deductible in full.

[Susan80]

We got new windows for our whole house in 2022. I'm confused about whether the expense counts towards repairs or a home improvement (depreciated asset) for my home office deduction. (The value of the windows is about 2.5% of the value of the home, in case that's a factor.) Thank you!

[LindaS5247]

Yes, home improvements such as new replacement windows are a eligible for a tax credit. For new windows, it's possible to get a tax deduction. The current tax credits for home improvements are expected to remain in their current form until 2032.

If you replaced your old windows with new energy-efficient windows, skylights, doors, or other qualifying items in 2022, you could be eligible to claim a windows tax credit of up to $600. Current energy tax credits for window replacement have been extended until December 31, 2032.

How you report this expenditure depends on the relative cost of the window replacement. If the cost is relatively low compared to the total value of the property, the IRS would consider this to be a repair rather than an improvement.

The IRS has issued lengthy regulations explaining how to tell the difference between repairs and improvements. These rules have been published here: Guidance Regarding Deduction and Capitalization of Expenditures Related to Tangible Property

If the windows are a repair, the cost would be included under the Home Office Deduction as a current year expense. If the value indicates this was an improvement, the cost would become another asset under the Home Office to generate depreciation expense.

You may also qualify for the Home Energy Credit, which doesn't make a distinction between repairs and improvements. Here are instructions on how to enter this info in TurboTax:

Click here for additional information on office deductions.