Do I use my mortgage price or the home value for line 4 on form 2106?

[KSG_KSG_XIX]

Hello. I'm trying to sort out my home office deductions.
Line 4 asks for "Total cost when asset was acquired."  I inherited the house, so it literally cost me nothing, other than a new mortgage.

[DawnC]

The basis (tax cost) of an inherited home is generally the Fair Market Value (FMV) of the property at the date of the individual's death.    You receive a stepped-up basis when inheriting property.   

Are you self-employed and what state are you filing a state return for?   Home office deductions are not deductible for employees, with a few exceptions, on your federal return.    Some states do allow the deduction - if your state does, then you can continue entering your employee expenses in that section.    But if your state doesn't and you don't meet one of the exception, nothing you enter there will be deductible on either return.  

If you are self-employed, your home office deduction should go on your Schedule C.     

The basis of property inherited from a decedent is generally one of the following:

• The fair market value (FMV) of the property on the date of the decedent's death (whether or not the executor of the estate files an estate tax return (Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return)).
• The FMV of the property on the alternate valuation date, but only if the executor of the estate files an estate tax return (Form 706) and elects to use the alternate valuation on that return. See the Instructions for Form 706.

For information on the FMV of inherited property on the date of the decedent’s death, contact the executor of the decedent’s estate.   You will need this information if and when you sell the home.    

[ee-ea · Accepted solution]

You want the Fair Market Value of the building only (exclude land value) at the time you inherited it.

[KSG_KSG_XIX]

Hello, thank you for the prompt reply.

I am trying to claim workspace/materials for a small business, not my work-from-home office. (State of Michigan, by the way.)

So if I understand you clearly, I would use my FMV. It will take some searching to find it for the correct year.