How to claim home office remodel

[ksb]

I have a home office which is a separate building, but attached to the house via a breezeway. We've recently remodeled a bathroom, used by clients. The project was started in the fall of 2019, and I paid the construction company two deposits before the end of the year. It wasn't completed until 2020, so the final payment wasn't made until after the new year. How do I claim the cost when it's split between two years? Thanks for any advice! --ksb

[KristinaK]

If the expense qualifies as a repair, you can include what was paid in 2019 as a direct expense to your Home Office.

If the expense qualifies as an improvement (betterment), and it hasn't been placed in service yet, you would need to wait to report the entire improvement on the 2020 tax return. When you enter your Home Office expenses in TurboTax, you will eventually get to the screen about Depreciation for your home office. You can select An improvement to your home radio button and enter the cost there. 

[ksb]

KristinaK, thank you for answering my question. The new bathroom is listed as an upgrade to the entire home, and depreciated. That part I understand, but think I need to clarify a little more. It was a total remodel of the bathroom starting in 2019, and was put back into service in October. We had to wait on the cabinet to be completed, which didn't happen until 2020, so the final bill, with balance due after the cabinet was installed, didn't come in until then. Approximately 80% was paid in 2019, with the final 20% paid after the remodel was completely finished in 2020. I just am not sure how to claim the final payment. Should I claim the 80% in 2019, and then the remaining 20% with 2020 taxes, or can I include it all as one line item in 2019?

Thanks,

ksb