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Thanks for your detailed answer. I had a question on this part:

"The same applies for the home office deduction. You can only claim a home office deduction for a space used regularly and exclusively for a home office. The home office deduction includes both expenses and depreciation. If the business portion is completely expensed, there would be no annual depreciation write off."

 

Is this a combination of both methods (I can take the purchase of the Boat as a 179 business asset and also take the benefit of treating the Boat as my primary residence)? I believe one could do both.
If I buy a boat for $100,000 and let's say I take a 179 for the 95% of the boat and write off 95% of the depreciation. Since I am using both benefits, then I will take homeowner writeoffs like property taxes and mortgage interest because it is my primary residence. Because it is my business as well, I will go with 95% for a home office percentage and write off 95% of repairs (but do I have the choice to write off 100% of business expenses in the Schedule C expenses section since this is my main business). Also, when I take the home office deduction, I believe you are saying that I couldn't write off depreciation because that had already been written off under the 179 when purchased as a business asset. (Is there a way that TurboTax could know this or would I have to use the "Forms" view) Then when I go to sell my home/business asset, how is the gain treated?
Let's say I sell the houseboat which is my primary residence for $200,000. Would the $100,000 gain be tax free capital gain because of the Home Sale Exclusion of $500,000 for married filing jointly? OR would I have to deal with Depreciation Recapture and get taxed on $95,000 at 25% (I believe Ordinary Gains are taxed at 25%)