Depreciating home as part of home office deduct, what to enter home cost? Original purchase price? What it is valued at today? What it costs me in utilities etc. upkeep?

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.

• The fair market value of your home (excluding land) on the date you began using your home for business.

Publication 587 Business Use of Your Home

I'm sorry, I don't understand what you're saying, it's like a foreign language to me. How do I figure out "adjusted basis of your home"? Is that the price it was valued at when I started using it for a home office? Does that include expenses for upkeep? Utilities? Cost of improvements?

I purchased the home in 2001, started working from home in 2004, rented it out from 2008-2015, and then moved back in 2015 and was still working from home. So did I start using it as a home office in 2004 or 2015? Do I dig up the cost of the land vs structure in 2001 or 2015?

Thanks for your help, and please feel free to answer in laypersons' speak.  🙂

Any depreciation you took on tax returns for the Home Office or rental income is added back to the basis when you sell the home.  This is TAX DEFERRAL- meaning pay later.  It essentially allows you to pay tax later.

@IdaChik

READ the info in this link to get educated and also click on all the Learn More links you run across :    

Publication 587 Business Use of Your Home