Regular/Standard/Actual Expenses Method - No, all allowed or allowable depreciation must be considered at the time of sale. You can generally figure depreciation on the business use portion of your home up to the gross income limitation, over a 39 year recovery period and using the mid-month convention. As long as you determine actual expenses and the correct amount of allowed or allowable depreciation, the depreciation reduces the basis of your home accordingly, whether or not you actually claim it on your tax return.
Simplified Option - There's a simpler option, as announced in Revenue Procedure 2013-13, where qualifying taxpayers may use a prescribed rate ($5 per square foot limited to 300 square feet) to compute their business use of home deduction. This option used in lieu of determining actual expenses has the advantage of reducing taxpayers' recordkeeping burden. Under this option, depreciation is treated as zero and won't reduce the basis of your home. For more information, visit Home Office Deduction, Simplified Option for Home Office Deduction, and FAQs – Simplified Method for Home Office Deduction. In addition, under this optional method, taxpayers can still deduct business expenses unrelated to qualified business use of the home for that taxable year, such as advertising, wages, and supplies.
On a related note, it appears you are using TurboTax Self-Employed so please ensure you entered the home office deduction in the appropriate section, e.g. employee job-related expenses section vs. self-employed business expenses section. If you entered the home
office deduction in an incorrect section, you cannot transfer it, you have to
delete and re-enter in the appropriate section.
If you entered the home office deduction in the employee
job-related expenses section, please note that the home office deduction for
employees is subject to the 2% rule and is included as an itemized deduction on Schedule A. Furthermore, TurboTax automatically selects the federal
deduction –
standard or itemized – that works best in your favor. As you may already know,
itemized deductions are subject to various thresholds and/or limitations so
that may explain why your tax refund(s)/owed have not changed. Moreover, your
total itemized deductions may not be greater than the standard deduction.
If you entered the home office deduction in the self-employed business expenses section, please note you cannot deduct more than the net profit your business makes each year. (But like other operating losses, you can carry these forward into future tax years.)
Please
review the following link(s) and the link(s) embedded on the webpage(s)
for more information:
