Re: Are whole-home generators tax deductible?

Tessey — Wed, 21 Jun 2023 20:03:49 GMT

I run a business from my house. My business is supplying lithium batteries for police radios. Lithium batteries should be stored at temperatures between32°F and more than 80°F. I keep in the mid low to mid 6 figure value of batteries at any given time. Do you think this would allow me to deduct the cost of the generator? I have to do this anyway but it would be nice if I was allowed to have some kind of a deduction for this reason.

Re: Are whole-home generators tax deductible?

Opus 17 — Wed, 21 Jun 2023 20:38:00 GMT

If your home is your principle place of business and this is a schedule C self-employment opportunity, you can claim a deduction for business use of your home (the "home office" deduction"). You must also have an area of the home that is set aside for the regular and exclusive use of the business. (This might be a room or portion of a room but you can't, for example, claim your kitchen as a home office even if you work there, because you also use it for personal functions.)

https://www.irs.gov/publications/p587

https://www.irs.gov/taxtopics/tc509

https://www.irs.gov/publications/p535

If you claim the home office deduction you can claim your household expenses on a pro-rated basis. For example, if you use 10% of the home for work, you can deduct 10% of your mortgage interest, 10% of your utilities, 10% of your insurance, and 10% of money spent on general repairs or improvements to the home. If you make improvements specifically to the home office, you can deduct 100% of the cost, but if you make general improvements to the home, they are claimed on a prorated basis.

Then further, improvements must be depreciated over time, 39.5 years for general business use. That means that, suppose you use 10% of your home for your business and the generator costs $10,000 with installation. You could deduct $25 per year as a business expense. (10% of the cost spread out over 40 years.). Depreciation also has to be recaptured when you sell the home.

If you are claiming the home office deduction, you are already claiming general depreciation on the home itself. If you add an improvement to the home after you start using the home in business, you add the improvement as a new asset for depreciation purposes.

If the generator only protected the business use of the home, you could claim 100%, but it still must be depreciated as an asset, not an immediate expense.

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Re: Are whole-home generators tax deductible?

Re: Are whole-home generators tax deductible?