For starters, if the bath room itself is 0% business use, I would not bother with this. Remember, depreciation is not a permanent deduction. All depreciation taken is recaptured and taxed in the tax year you sell the property. Two things about depreciation recapture most do not think about.
1) Recaptured depreciation is added to your AGI in the tax year you sell the property.
2) The increased AGI has the potential to bump you into the next higher tax bracket. Weather it actually does or not just depends on the numbers.
However, if you want to start depreciating the increased cost basis, I don't see any reasons why you can't. It may be simpler than you think. If you remodeled an existing bathroom, lets use the following numbers for simplicity.
Cost basis of house when you originally purchased it: $100,000
Forty percent of that would be $40,000 and that is what is being depreciated if 40% of your floorspace is used for business.
Bath remodel costs $10,000. So your adjusted cost basis for the house is now $110,000.
Forty percent of $110,000 is $44,000.
So you have an additional $4,000 to start depreciating.
Enter it in Turbotax not as a home office, but as a business asset in the Business Assets section. It would be classified as real estate property, non-residential real estate. For description I would call it something like "Remodeling". Cost would be $4000 and Cost of Land would be 0% since nothing changes on the land front. Date purchased/acquired would be the date the project was completed.
Select "purchased new" and "used 100% for business" and the date you started using it would be the date the project was completed.
On the summary screen you can elect to see the details and note that it's depreciated over the next 39 years with 2022 being the first year of depreciation. Note the amount of depreciation for that first year depends on the date it was placed "in service".
