Converted detached garage to home office

[coleen-pub]

I purchased my home in 2005 for $235,000 (current value is approx $250,000).  In June 2016, I converted a detached garage into a home office (new business use - I haven't claimed the home office expense in the past).  The cost of the conversion was $2,900.  The square footage of the house is about 3,000, the square footage of the detached garage is 300.

When I add the Home Office "Asset", I'm unclear what I should be entering for the "Cost".  Just the cost of the improvement?  Or the current market value of the house?  Also what should I be listing for the "Date purchased or acquired" (the date of the house purchase or the date of the improvement/conversion to the garage)?

It appears if I only deduct the cost of the improvement, then it's not depreciating a % of the value of the house. 

[Coleen3]

Add the conversion amount to the basis of the house and depreciate an entire amount as described below.

To figure the depreciation deduction, you must first figure the part of the cost of your home that can be depreciated (depreciable basis). The depreciable basis is figured by multiplying the percentage of your home used for business by the smaller of the following. The adjusted basis of your home (excluding land) on the date you began using your home for business or the fair market value of your home (excluding land) on the date you began using your home for business. 

When asked for date purchased or acquired, enter that date. The program will later ask on what date you began using the home office. 

Please see Pub 587 for more information.

https://www.irs.gov/pub/irs-pdf/p587.pdf