increased the size of my home office by opening-up a wall

[Danny367]

I have a home office / studio where I regularly see customers. I needed more space in order for customers to have room to sit while they're waiting. to achieve this, I opened-up a wall in my home office / studio thereby increasing the size of my home office / studio. the cost to do so was $4,150. this improvement was done exclusively for the benefit of the home office / studio in order to expand its square footage. 

I need help determining where and how to capture this $4,150 expense in turbotax.

thank you.

[PatriciaV]

The cost of the renovations is an Improvement for your home office. In the same way you entered your home as a Home Office Asset, you should add this Improvement for depreciation. 

As you work through the Home Office topic, look for the page titled "Home Office Asset Summary." Click Add an Asset under the existing list and follow the prompts to enter your cost as an improvement for the Home Office part of your home only.

[Danny367]

thank you for responding.

we completed a project that benefited more than just the home office in 2021 but I wasn't aware that I could capture these kinds of improvements. can I include this improvement on my 2023 and return and use 1/1/2023 as the date it was purchased / acquired even though the project was completed in 2012 (but never reported)? or do I put it on my 2023 return with a date of 12/30/2021 which is when we made final payment?

also, we completed another project that benefitted more than just the home office in very late 2023 (final payment was made 12/27/2023). is it ok if I add this asset (and the increased square footage) to my 2024 return with a purchase / acquisition date of 1/1/2024 even though final payment was made 12/27/2023? separate from when to add as an asset, I'm asking whether to include the additional square footage on my 2023 when entering the home's total area in order to calculate the home office's percentage of square footage.

Thank you.

[AmyC]

You may want to amend your 2021 and 2022 returns to cover the 2021 expansion. You can add it to your 2023 with the 2021 date.  As for the new changes in 2023, you can not begin depreciation until it was available for use in 2024 according to Depreciation Reminders.

I would use 1/1/2024 for the new asset since that is the available date and your basis will not have changed over a few days.

[Danny367]

thanks for helping me. I really appreciate it and sorry for the follow-up question; I want to be certain I have this correct.

if I can add the 2021 project with a 12/30/2021 start date, what would be the benefit / need to amend earlier returns? I'd like to avoid amending and I don't mind missing out on some depreciation if that's the only downside.

regarding the new asset where we made final payment 12/27/2023, I can both use 1/1/2024 as the start date (on my 2024 return) AND not include the additional square footage in my 2023 calculation for the purposes of my home office - correct?

thank you.

[DianeW777]

You can choose not to amend, however for 2023 you must use the 2021 date it was completed and placed in service.  You would lose the depreciation you did not take for the home office percentage only for 2021 and 2022, however when and if you sell the home later you must recover that expense even if you don 't use.  Depreciation is always allowed or allowable when it comes to a sale - basically use it or lose it.

It depends.  The last payment for the capital improvement is not the key.  If the new improvement was completed earlier in 2023, you can begin to depreciate that space when it became usable and placed in service for your home office regardless of when it was paid off.

If it was close to the start of 2024, when you actually began using it, then it would be fine to wait until 2024 to begin to add that for your home office.  The amount for a few days does not necessarily indicate it was ready and available before 2024.  That is a decision you must make.

• Accessing a prior-year return
• Amending a prior-year return

@Danny367