I have a home based business (online sales). I have replaced the old worn out carpet in my office and inventory storage space with new flooring. Can I deduct this? Where?
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Level 1

I have a home based business (online sales). I have replaced the old worn out carpet in my office and inventory storage space with new flooring. Can I deduct this? Where?

23% of my home is deducted as a business expense for my home office and inventory storage.  I replaced the flooring this fall, only in my business areas.  Can I deduct this as a home office business expense?  Where do I do this in Turbotax Home and Business 2017?  Is it an expense or a depreciation?  Thank you.

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Level 5

I have a home based business (online sales). I have replaced the old worn out carpet in my office and inventory storage space with new flooring. Can I deduct this? Where?

Replacing the flooring can be deducted as an expense or depreciated, depending on where it falls in the IRS definitions of Repairs, which are deducted, vs. Permanent Improvements, which are depreciated.  Please see:  https://www.irs.gov/pub/irs-pdf/p587.pdf

For Repairs, the IRS says:  Repairs keep your home in good working order over its useful life. Examples of common repairs are patching walls and floors, painting, wallpapering, repairing roofs and gutters, and mending leaks. However, repairs are sometimes treated as a permanent improvement and are not deductible.

Whereas for Permanent Improvements, it says:  A permanent improvement increases the value of property, adds to its life, or gives it a new or different use. Examples of improvements are replacing electric wiring or plumbing, adding a new roof or addition, paneling, or remodeling.

A high-quality wallpaper might be an improvement whereas a similar or lower-grade carpet might only be a repair.  That's for you to judge.

To deduct the flooring expense, start in Business Expenses > Home Office Expense, select Start or Update, then proceed to the screen "How do you want to enter [your] home office expenses for 2016?"  You'll choose the first "actual expenses" method, then proceed to the screen with the question, "Does [name] have expenses that apply only to the home office?"  Select yes and proceed to the screen where you enter the home office-only repairs.

To depreciate, Start or Update Business Assets and follow the screens to enter the flooring as an asset.

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