Yes, consider me further educated. Thank you.
No, I have not done anything yet. I am simply trying to understand any tax advantages by asking a couple of questions in an online anonymous forum for self tax preparers since the topic is one that is not that well covered using the various Google searches that I have performed to date.
I am familiar with plenty of professionals who purchase a condo to use solely for a home office. Perhaps they already own a condo in the building and they need more room for an office and so they purchase another condo solely to work in. They don't see customers. It's not a storefront. It's a remote work situation that deals with computer programming and administrative work. I already have a business license from my state and town with my current home as the address because I devote a portion of my home as a home office and I was told that I needed to pay for a state and town license for my home office when I went to pay my state excise tax for my sole proprietorship. This was not difficult to obtain.
I understand. Purchase the home / condo. Don't use it for anything but work. It would be substantially smaller than my current home. Begin depreciating it using commercial property depreciation. No 179, no bonus depreciation. Deduct it and various other expenses and interest and taxes for the property on your schedule C out of your 1099 income. Should I ever decide to sell it would then need to pay any depreciation recapture and capital gains. Be prepared for it to be challenged. But, I work remotely and simply require some quiet space and a computer to do my work and to make phone and zoom calls. I've outgrown my current home office. There's little reason for me to purchase a commercial office space in order to do my programming job.
I get the gist. I can run the numbers myself to get a very rough estimate about what if any financial benefits there may be. Should it remain favorable and I consider this option more seriously I will likely seek professional help at that point.
In the past I have used a professional to do my taxes. All he did was just my taxes. There was little in the way of actual tax advice like start a defined benefit plan, the various pieces of equipment I could deduct, or say bonus depreciation on a heavy work vehicle to visit job sites. It was just here's your tax return. There was no planning. I find that actually understanding some of the rules helps me better understand what questions and options to consider. As my tax situation becomes more complicated perhaps I will seek further professional assistance in the future.
This is a forum for self-preparation of tax returns. People will ask questions.
