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TaxxyDude
New Member

Question about deducting rent for a home based busiess

I own a sole proprietor LLC which I run out of a rented apartment in California. I am a nation-wide broker, conducting 100% of my business over the phone and/or internet. For the year 2020, I have spent 50 weeks in Colorado tending to a Covid related family matter. During that time, I have paid rent on an empty apartment in California. In years past, I have claimed 30% of my rent as a business deduction, based on the square footage of the apartment used to conduct business. For the year 2020, I have used 0% of the apartment as my “residence” as I have not been there. I have also used 0% of the apartment to conduct business however I am using the address of my apartment as a place where I registered my business. I paid the California LLC fee as well as state and local business tax for my business whose address is my apartment. I also receive business mail at this “apartment” address. Based on the fact that for the year 2020, I use 0% of the apartment as a residence but am rather using it 100% as the registered address for my business, can I claim 100% of my rent as a business expense?
3 Replies
martinmarks1919
Level 8

Question about deducting rent for a home based busiess

You can only deduct the percentage you use for business purposes...and maybe not even that because you didn't conduct any business from the home office.

Anonymous
Not applicable

Question about deducting rent for a home based busiess

If you use part of your home exclusively and regularly for conducting business, you may be able to deduct expenses such as mortgage interest, insurance, utilities, repairs, and depreciation for that area. You need to figure out the percentage of your home devoted to your business activities, utilities, repairs, and depreciation.

 

i would say that due to no regular use during the year for conducting business, none of your rent is deductible. 

 

Carl
Level 15

Question about deducting rent for a home based busiess

I have spent 50 weeks in Colorado tending to a Covid related family matter.

Hopefully everything on the COVID issue as worked out good for the family in the long run and everyone recovered.

There's no way possible that you used the home office back in California "regularly and exclusively" for business for the entire tax year. Therefore you do not qualify to claim a home office in the California home at all for the entire tax year. But did you pay rent to live in Colorado? I suspect not, since you mentioned you were assisting a family member with COVID. More than likely you were living with and self-quarantining with that family member.

 

Assuming you left CA in say, March or April of 2020, what you can do is "close" that home office effective the day before your day of departure to Colorado. Then you can deduct your office rent and expenses up to that date.  Better than nothing.

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