Art studio deduction

[sadiegato]

I am a professional artist. I build a free-standing art studio in 2022 for my business (on my own property). The cost was $15,000. Can I write-off the $15K on my taxes?

[AmyC · Accepted solution]

You have a depreciable asset with your new building and can only depreciate it. To do so:

1. Return to the business section
2. Edit
3. Select Business Assets
4. Large purchases, yes
5. $2500 or less, select no for this entry, continue
6. improvements, no
7. describe, Real Estate Property
8. drop down box, enter date building was completed for use
9. Tell us more, select Nonresidential real estate
10. Tell us about large purchase, describe, art studio
11. cost $15,000
12. land 0, continue
13. Select I purchased this asset and yes for 100% business - unless you do use if for personal purposes as well, then select no.
14. drop down for when you started using, continue
15. This year's depreciation will show and you can click the show details box.

Your office building has a 39 year life over which to depreciate. For more information see Pub 946 which states:

Nonresidential real property. This is section 1250 property, such as an office building, store, or warehouse, that is neither residential rental property nor property with a class life of less than 27.5 years.

[Carl]

Just to help clarify, no you can't just write it off. The cost of the structure is entered in the Business Assets section and gets depreciated over time. For business property it's 39 years.

Understand that depreciation is not a permanent deduction. In the future when you sell or otherwise dispose of the property that appreciatio  has to be accounted for. If you sell, then depreciation is recaptured in the tax year you sell, and you pay taxes on that recaptured depreciation. Two things about that:

1. Recaptured depreciation is taxed anywhere from 0% to a maximum of 25%, depending on your AGI in the year you sell it.

2. Recaptured depreciation is included with your AGI and therefore has the potential to bump you into the next higher tax bracket. it just depends on the numbers.