how to deduct cost of new roof on our house?? We use our home for 4 different businesses (home office deduction)

[waveromper]

Hello! I'm confused about how and where to enter the $14,000 cost of our new roof ... because in 2022 we operated 4 businesses out of our home and take the home office deduction for all 4 of them. I thought a roof was a capital improvement that has to be depreciated for 39 years, but Turbo Tax is also offering the option to take a full or partial Section 179 deduction to expense it. I have no idea which option is better, and no idea how to handle the complicated fact that there's more than one business using the home. HELP PLEASE! I need an expert's specific step-by-step explanation of how to do this.  😵

Thank you so much!

[DianeW777]

Yes your roof is a capital improvement. You should use the cost of the roof just like you do for your home cost that you have used for your four home office deductions.  You can depreciate it just the same and take the partial depreciation for each home office deduction for the four businesses using the 39 year recovery.  Or if your home office space is used 100% for business you could choose the option of Section 179. Keep your information until you sell your home due to the recapture rules for depreciation.  Section 179 would also need to be recaptured in any year that the business use of the home office drops below 51% business use or stops being used as a home office.

Partial business use. 

When you use property for both business and nonbusiness purposes, you can elect the section 179 deduction only if you use the property more than 50% for business in the year you place it in service. If you use the property more than 50% for business, multiply the cost of the property by the percentage of business use.

Here is the definition of 'Qualified Section 179 Real Property':

Qualified section 179 real property. 

You can elect to treat certain qualified real property you placed in service during the tax year as section 179 property. If this election is made, the term “section 179 property” will include any qualified real property that is: 

• Qualified improvement property as described in section 168(e)(6) of the Internal Revenue Code, and 

• Any of the following improvements to nonresidential real property placed in service after the date the nonresidential real property was first placed in service.

1. Roofs. 
2. Heating, ventilation, and air-conditioning property. 
3. Fire protection and alarm systems. 4. Security systems.

[waveromper]

Thank you Diane! If I'm understanding correctly, the total square footage of all our offices is combined is under 50% of the home's square footage. Therefore it's under 50% business use, so I can't take the Section 179. So exactly where in Turbo Tax do I enter this roof depreciation? I need help being walked through to get to the spot to enter the cost.  Is it in the Business Income & Expenses section and I'd select the name of each business and enter it in each, one at at time? When I'm inside a business, is it Business Assets (business property that is depreciated)? OR is it Home Office Expense? Or is it somewhere else?  I'm lost. 🤔

[AnnetteB6]

Since you are claiming the roof replacement as a whole house improvement, you will enter the depreciation for that improvement under each Home Office section.  

As you go through the Home Office section to enter expenses you should see a question about whether you made any improvements, either to just the home office or to the whole home.  You would enter the cost of the roof as a whole home improvement.  Then, the percentage of business use for that particular home office that you are entering will be applied to the total cost of the roof replacement.  

Since you have four home offices, you will do this four times, entering the total cost of the roof replacement each time.  TurboTax will do the math to apply the appropriate business percentage.  Also, be aware that you must be using actual expenses for the home offices, not the simplified method.

@waveromper 

[waveromper]

Thank you so much for the prompt and perfectly clear reply, Annette! Your timing was just right too. 😀👏

[waveromper]

Oops, I'm confused again now that I'm in TurboTax ... I started with business #1. The home office expenses area has an area for repairs. But I see that's not the spot because when I clicked "see more examples" it said a new roof isn't a repair -- it has to be entered in the Assets section as a home improvement. (see screenshot) Ok yes I understand that. Confusion begins: TurboTax's pre-populated figures were there for the date we started using the home for business, the original cost of the home, the land, business use percentage, and prior depreciation. Nowhere does it ask for the cost of the improvement, so I guessed maybe I'm supposed to put that $13,962 in the "cost" box. I replaced the original cost of the home figure with this roof cost, changed the date to the date on the roofing invoice, and left all the other pre-populated figures as they are. In the end it says I have $0 depreciation deduction.  😫

Could you please please look at my attached screenshots and let me know what I'm doing wrong? I was really hoping to finish my tax return today.

THANK YOU for any help.

=========================================

@AnnetteB6

[RobertB4444]

Looks like you replaced the original home with the improvement instead of adding a second asset.  You need to change everything on that asset back to the original house and then create a new asset for the improvements by clicking the 'add an asset' button there on that last screen.  You don't need to edit the asset that is already there.

@waveromper 

[waveromper]

Thank you Robert!! 🎉 Wow what a crazy mistake. I'm all set now. I appreciate the quick reply too! 

[gilbertcarmona49]

can I deduct the cost of roof repairs on my home?

[DoninGA]

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@gilbertcarmona49 wrote:

can I deduct the cost of roof repairs on my home?

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Repairs on a personal residence, not used as a rental or in a business, are not deductible on a tax return.