a_tom.v is incorrect re. depreciation - if this is a Schedule C business (rather than Schedule E), which it sounds like it is, then you do have a choice - in any particular year you can choose to use the Simplified Option deduction at $5 per square foot (up to 300sf), instead of depreciation/utilities etc; by doing this you're no longer eligible to depreciate the area for that year, thus no depreciation recapture. The IRS is pretty clear on that. Also if you use the Simplified Option you still get to take the full Schedule A deductions for mortgage interest & property tax. <a rel="nofollow" target="_blank" href="
https://www.irs.gov/businesses/small-businesses-self-employed/simplified-option-for-home-office-dedu...>
