My wife and I installed solar panels on my home in July 2020 at a cost of $34,362. We took a 20-year loan to pay for them, and we received a $8,934 federal residential energy credit and a $5,000 New York solar energy system equipment credit. (We applied these credits to our loan principle in early 2022 to lower our payments.) Now we pay $124.02 per month on this loan.
My wife began a business on Jan. 1, 2022 that uses a portion (7.89%) of our home as her office. Turbo Tax says I can deduct 7.89% of mortgage interest and real estate taxes (since we aren't itemizing) and utilities as business expenses. What about the payments we are making for the solar panels? I've seen elsewhere that they are an asset, not an expense, and can be depreciated, but does that apply to assets purchased prior to the business being started? I've also seen that the interest can be prorated as an expense. (We paid $762.73 in interest last year.)
How do I handle this? Can someone help me?
