I’m considering using the actual method to take the home office deduction for my office above our detached garage. I’m hesitant because I’ve read that by doing this, I will be responsible for capital gains taxes on that portion of the profits from a sale of the house in the future. This is because it is a separate structure, apart from the main home.
I’ve also read that these taxes can be avoided if, for at least two years before selling, we “own and live in that portion of the home as our primary residence”.
Now, I’m assuming that doesn’t mean we have to move all our belongings into the “carriage house” office and sleep there for two years, right? If I simply stop claiming it as a home office and we continue to live in the main house, using the office garage area for storage or guests, would that be sufficient to avoid taxes when selling the property?
I realize there would still be depreciation recapture, but I’d be getting more from the deduction in the interim. I’m only worried about the capital gains separate structure tax.
Hypothetically, let’s say there’s an emergency and we have to unexpectedly sell our home quickly. Could I amend the previous two years returns to not claim the home office deduction and also avoid the capital gains that way, in a pinch?
