Art studio deduction

Forum|Forum|3 years ago
February 2, 2023
2 replies
20 views

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?

Best answer by AmyC

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

Return to the business section
Edit
Select Business Assets
Large purchases, yes
$2500 or less, select no for this entry, continue
improvements, no
describe, Real Estate Property
drop down box, enter date building was completed for use
Tell us more, select Nonresidential real estate
Tell us about large purchase, describe, art studio
cost $15,000
land 0, continue
Select I purchased this asset and yes for 100% business - unless you do use if for personal purposes as well, then select no.
drop down for when you started using, continue
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.

AmyCAnswer

Level 15

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

Return to the business section
Edit
Select Business Assets
Large purchases, yes
$2500 or less, select no for this entry, continue
improvements, no
describe, Real Estate Property
drop down box, enter date building was completed for use
Tell us more, select Nonresidential real estate
Tell us about large purchase, describe, art studio
cost $15,000
land 0, continue
Select I purchased this asset and yes for 100% business - unless you do use if for personal purposes as well, then select no.
drop down for when you started using, continue
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:

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Carl

Level 11

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.