Deduction for materials when adding an office to a workshop on my property?

[changethursday]

I have a large workshop at my house that I use for contract work + personal use (woodshop + working on cars). For work I use it to make things I need for work + store my work gear (video production). 

in 2023, I spent ~$7500 building an addition onto the workshop thats used for storage + a dedicated office (storage to clear up floor space, dedicated office so I could get out of the house and focus)

I did all the work myself, those are all materials costs.  The workshop has never been listed as a business asset, its was a building on a the property when we bought our house, and over the years, I've updated it and renovated the interior for general use. This 2023 work was the only time I did anything to it specifically for my contract work. 

What, if anything, can I deduct?

[Vanessa A · Accepted solution]

It sounds like you now have a spot that is completely for your business separated from the rest of your personal stuff and use.  If so, then the $7,500 addition would be a building asset and would be depreciated.

 The key is regular use for storage and exclusive and regular use for the home office.  You can enter this as a home office and walk through the steps to take the deduction. 

[changethursday]

Thank you!!