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Can I Depreciate Construction Costs and also take the Simplified Home Office Deduction of an office built next to my house?
We are building an office next to the house. It fits all the usage requirements for a home office. If we depreciate the construction costs to build it, can we still take the home office deduction using the square footage? If not in the year of construction, how about future years?
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Can I Depreciate Construction Costs and also take the Simplified Home Office Deduction of an office built next to my house?
As Carl said, you can not depreciate it and use the Simplified Method for your Home Office Deduction in the same year.
Because of the large cost of building a separate structure, the I suspect the Actual Expenses (with depreciation) will give you a better deduction. Depreciating 100% of the new structure would be easiest and most accurate.
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Can I Depreciate Construction Costs and also take the Simplified Home Office Deduction of an office built next to my house?
- If this building is a separate structure and that building will be your home office with 100% business use, you can add it as an asset to your property with 100% business use and it will be depreciated over 39 years.
- The other thing you can do is add the cost basis to the cost basis of your entire property. This can NOT be depreciated. It just increases the cost basis of your property. Then you have to refigure your total square footage, since this "addition" increased it. Then the percentage of that new higher total square footage used for the "home office" (which is the new building) is used to figure your home office deduction.
Once you select a method, you can not change it later down the road. But either way you go, you will be closing the old, existing home office first. Then the next day, you open your "new" home office.
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Can I Depreciate Construction Costs and also take the Simplified Home Office Deduction of an office built next to my house?
As Carl said, you can not depreciate it and use the Simplified Method for your Home Office Deduction in the same year.
Because of the large cost of building a separate structure, the I suspect the Actual Expenses (with depreciation) will give you a better deduction. Depreciating 100% of the new structure would be easiest and most accurate.
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Can I Depreciate Construction Costs and also take the Simplified Home Office Deduction of an office built next to my house?
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Can I Depreciate Construction Costs and also take the Simplified Home Office Deduction of an office built next to my house?
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Can I Depreciate Construction Costs and also take the Simplified Home Office Deduction of an office built next to my house?
For example, let's say the entire home cost $200,000, and the new structure costs $20,000. Rather than depreciating PART of the $200,000 cost (based on square footage) over 39 years, you would depreciation ALL of $20,000 over 39 years. The end result would basically be the same, but it is more accurate to depreciate the entire new structure, rather than PART of the combined total of both buildings.
Does that clarify it?
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Can I Depreciate Construction Costs and also take the Simplified Home Office Deduction of an office built next to my house?
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Can I Depreciate Construction Costs and also take the Simplified Home Office Deduction of an office built next to my house?
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Can I Depreciate Construction Costs and also take the Simplified Home Office Deduction of an office built next to my house?
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Can I Depreciate Construction Costs and also take the Simplified Home Office Deduction of an office built next to my house?
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