Renovation Costs and Home Office Deduction

[Brendan S]

I am self employed, work from home and regularly take the home office deduction.  I recently purchased a home that required a gut rehabilitation and entirely new mechanicals.  I will use a portion of the house for a home office.  Is there a limitation on how much of those renovation costs I can take as an indirect expense on my home office deduction?    

[AnnetteB6]

No, there is not a specific dollar amount limitation that would be placed on claiming the renovation costs.  The renovation cost will be depreciated as a component of the home itself and would be limited to the percentage of the home office square feet versus the whole house square feet.  

Additionally, the total home office expense may be limited by the percent of business use of the home office and the income of the business.  So, in that respect, the renovation costs attributed to the home office could be limited further.