We had a detached garage that we had converted to a dedicated pilates studio for my pilates business. I see all my clients there regularly so it definitely qualifies as a home office.
As part of our home office deductions this year, can we deduct the entire expenses to convert the garage to the pilates studio? We had a general contractor do all the work and it came to around $40,000. We are reading differing points of view such as:
- Yes: If you already have the space as part of the home, turning it into a home office is more a matter of remodeling than building. The costs of doing such a remodel are 100 percent deductible .
- No: You can only add the cost of the project to the basis if your home and indirectly depreciate it via home depreciation deduction. (which you will have to pay back when you sell the home)
Note that this was existing structure, that we simply remodeled for the purposes of strictly using it as a home office for the business. It is a detached structure, but it is on the same utilities (electricity/gas) as the home.
