topic Separate home office structure in Deductions & credits

Separate home office structure

jmorvan — Mon, 08 Mar 2021 19:43:45 GMT

My new husband and I are both self-employed with home offices (from our respective houses) that we have previously deducted very straightforwardly on a square footage basis. My office is a defined portion of my house where I do design work and meet with clients. My husband builds furniture and requires a lot of space and a specific set-up. The past few months we have been building a workshop for him at "my" house, so that we will eventually be able to sell his house. We both live in my house, but he has been driving to his old house all year as his place of work. He is hoping to move into the new workshop in a few weeks. I am very confused as to how I should deduct the new workshop on our taxes for 2020. The bulk of the expense occurred in 2020, but he still used his former home as his active workshop while the new building was under construction. I should also note that the residential part of his house was rented last year. Please help!

Re: Separate home office structure

npierson7 — Mon, 08 Mar 2021 20:06:44 GMT

You can deduct your home office using the actual expenses method and prorate the expenses between yours and his business. You can deduct part of expenses for both houses. Keep in mind, you'll also have to prorate expenses for the old house for rental and personal/business use.

Re: Separate home office structure

jmorvan — Mon, 08 Mar 2021 20:39:42 GMT

Does that mean I would combine the square footage of the house with the square footage of the new workshop, and attribute the workshop square footage to him, and my existing square footage to me?

I was thinking the workshop, as a new building, might need to be an asset with depreciation over time?

Re: Separate home office structure

npierson7 — Mon, 08 Mar 2021 20:59:49 GMT

If his new workshop is a different building, then you can't claim it as a home office. What you can do - claim your existing square footage for your business, as you did before, and square footage of area which was used for business in your husband old place as his home office. Set up a new building as a new business asset, you'll be able to take depreciation and amortization deduction for that.

You can find more information here:

Taking Business Tax Deductions

Re: Separate home office structure

jmorvan — Mon, 08 Mar 2021 21:01:47 GMT

Ok, thank you. That is more in line with what I thought. I should specify that the new building is in the backyard.