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tigerdx
Level 2

BackYard Office Shed

Hello Everyone does any one know if we can write off the cost to purchase one of those backyard office shed that is moveable for business purpose with 179?

7 Replies
Carl
Level 15

BackYard Office Shed

It depends on the cost and asset classification. Basically, if it doesn't qualify for SEC179 deduction, then the program won't offer you that option. Just enter it in the Business Assets section and work it through. But from my prelimiary testing, since it's classified as non-residential real estate it would not qualify for SEC179 or the SDA deduction. (I can't see any other classification that would cover any structure without wheels used as an office. Perhaps another reader knows otherwise.)

 

 

 

tigerdx
Level 2

BackYard Office Shed

it is about 8 thousands with shipping!

Carl
Level 15

BackYard Office Shed

So the shed would be classified as Real Estate with a structure value of $8K and a land value of $0. Real estate does not qualify for the SEC179 or SDA deduction, and has to be depreciated over time. Being a SCH C type of business asset, it gets depreciated over 39 years. (Or 40 years, and can't recall which off the top of my head. But the program knows)

 

Critter-3
Level 15

BackYard Office Shed

If the shed is mobile and doesn't have permanent plumbing and electrical attached to the property then this could be just a 7 year property since it isn't exactly mentioned in any other category in the CLADR tables Appendix B :  

https://www.irs.gov/pub/irs-pdf/p946.pdf

tigerdx
Level 2

BackYard Office Shed

if it is for business purpose, do i claim that on business expansive?

VolvoGirl
Level 15

BackYard Office Shed

Yes if you file a Schedule C for self employment.  But not as an expense.  You add it as an Asset and depreciate it over several years.  If you paid any interest like on a loan for it you can deduct the actual interest you paid during the year.

 

IRS overview of Depreciation

http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/A-Brief-Overview-of-Depreciation

Mike9241
Level 15

BackYard Office Shed

 should be eligible to be classified as Section 1245--personal property, and depreciated over a 5 year period. thus it's eligible for section 179.  however, you may want to consider 168(k) bonus depreciation instead.  under certain situations,  your 179 can be limited by business income not so for 168(k).  should you dispose of the shed before the end of the 6th year, (the number of years you would take depreciation if you did not take 179), then you are supposed to recapture the 179 (because business use now drops below 50%), recompute depreciation using regular MACRs, and then take a loss on any remaining basis.   this doesn't happen with 168(k) 

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