Self employed using home office business deduction- how do I report capital improvement to home .ie. new windows

[1momof3boys]

S.E and write off a home office, which is where I do most of my work.  I spent over 17K to have my home windows replaced.  I looked at IRS Tangible property regulations on repair vs improvement.  It is lengthy and I do not understand.  Do I put them in on my Bus Assets under intangible?  TT says to put capital improvements in that section but it is not made clear where.   I also spent another 11K on gutters, new fascia, etc but that is on a loan of which I am paying monthly.  Can I report what I have paid this year as an asset also or do I handle that in a different way, like an expense.  Thank you.  It makes a huge difference in my tax bill and I do not want to mess it up. 

[MonikaK1]

Enter the cost of improvements to your home in the Assets/Depreciation section. These are tangible assets. An intangible asset is a non-monetary asset that cannot be seen or touched. Tangible assets are physical assets that can be seen, touched and felt.

Enter repairs as expenses.

If the improvements are to the home office only, you can claim depreciation on the full cost. If the improvements are to the whole house, you would claim the same proportion of the depreciation on the improvements that you claim on the house (home office percentage).

See this TurboTax tips article for more information on home office deductions.

See also this thread for another discussion of this topic.

[1momof3boys]

Thank you for your response.  In TTHB it gives you 4 choices to pick to describe the asset:

1. Computer, video phot and telephone equipment.

2. Tools, Machinery, furniture.

3. Real estate property.

4. Intagibles, Other property.  So what would I pick (this is where I am confused). I picked the last choice and then it says to categorize as

1. land improvements to your business if not associated with your home office (landscaping, paving)

2. Amortizable intangibles.  I know its NOT this

3. Other Asset type

1 or 3??

If you go to this action, you can see why it is so confusing.  

[AnnetteB6 · Accepted solution]

You would choose option 3, real estate property.  Because the improvements were made to your whole house, they will be depreciated in the same manner and for the same amount of time as your house.  

Also, be sure that you are entering these improvements through the Home Office section of your Schedule C instead of the Assets section.  That way the home office percentage of use will be applied properly and you will most likely see a different set of choices to make, including a question about whether any improvements were made during the year.

@1momof3boys 

[1momof3boys]

That was extremely helpful.  I found the right place to enter. If you could bear with me for one more related question.   We had to replace the gutters and fascia in our home.  We got a loan and pay monthly.  As a home office expense I guess that I cannot depreciate this.  Should I enter it like a repair or in some other place?   thank you SO, so much!

[AnnetteB6 · Accepted solution]

The gutter and fascia replacement would be handled in the same manner as the window replacement.  It is depreciated as a 'whole house' improvement with the percent of business use based on the home office size relative to the rest of the house.

The fact that you have financed the cost does not change anything.  You will enter the total cost for the replacement.  Technically, you have paid the entire cost through the loan or financing you are paying back.  You will not account for the monthly payments anywhere on the 2022 return or a future return since the total cost will be entered in depreciation.

@1momof3boys