HVAC purchase and home office

[cgx123]

I purchased a new HVAC system for my home where I have a home office.  I am having trouble figuring out where I enter this.  I do not see a place under home office expenses and then I look at assets and not sure what category to use.  Under assets, it ask for percentage of time of business use but should I use the square footage percentage instead.  TT does not seem clear on this. Does any special deduction apply?Any help please??

[VictoriaD75]

Because the HVAC system is for the entire home, it is considered an indirect expense. You cannot deduct 100% of the expense against the home office. An HVAC system is a capital improvement that would increase the cost basis of the asset and depreciated. It cannot be expensed unless it qualifies for the safe harbor election below $2,500.

Indirect expenses would include things like:

• bills for utilities,
• homeowners insurance,
• homeowners association fees,
• security, and
• general repairs and maintenance.

However, if the total cost was less than $2,500, you may be able to use the safe harbor election. But, remember only to expense the percentage of total square footage. For example, if your office space takes up 20% of the house, you can deduct 20% of your indirect expenses.

The Home Office Deduction

Business Safe Harbor Election

[ld321]

I added a new HAVC system to my entire home where I have a home office.  I am having trouble to figure out where to deduct this for my home office.  TT suggests to use assert but when I look at assets and not sure what category to use.  Under assets at "Describe This Asset", TT lists the followings:

1. Computer, Video, Photo and Telephone Equipment

2. Tools, Machinery, Equipment, Furniture

3. Real Estate Property

4. Intangibles, Other property

I selected Option 3, then it comes the question of "Have you used this item 100% of the time for this business". If answer No, it will ask percentage of time of business use. Here should I use the square footage percentage instead.  Or should I say 100% time use the HAVE? Any help please??

[MarilynG1]

Use Real Estate Property for your HVAC Asset.  It will be depreciated along with the house as a Capital Improvement to the house. 

Yes, you used it 100% for Business.  TurboTax will calculate the % of the expense as it relates to the % of your Home Office.

So if your Home Office is 10% of your total home space, TurboTax will calculate 10% of the HVAC expense to Home Office.

Here's more info on Claiming Home Office Asset Expense.

@ld321 

[ld321]

Thanks for the reply. Great help (and apology for my typos in previous post).

Just to confirm, in my case where new HVAC installed for entire house and my home office is one room in side the house, I should enter do the followings under Business Assets:

1. In "Describe This Asset", select "Real Estate Property"

2. Next in "Tell Us a Little More About Your Business Asset", select "Specific qualified improvement"

3. Next in "Tell Us About This Asset/Large Purchase", enter the name, cost and Date of purchase.

4. Next in "Tell Us About This Asset/Large Purchase", check the "I purchased this asset" box, and under question of "Have you used this item 100% for this business since you acquired it?", select YES

Please help to confirm if all these are correct selections to deduct my HVAC system cost for home office. 

I believe most of people are confused at above step 4 if we can say 100% of the time.

Thanks in advance.

[AnnetteB6]

No, you do not enter this under Business Assets.  It must be entered through the Home Office section of Schedule C or the home office percentage will not be applied.  All other details that you specified are correct, it just needs to be entered through the Home Office section instead of the Business Assets section

If it is entered under Business Assets, that implies that the HVAC is only used for your business and not part of the home office calculations.

Go to the Home Office section of Schedule C and after you have entered all of the categories of home office expenses (such as utilities for example), you should see an option to Add an Asset or you may see an Asset Summary.  This is where you will enter the information for the HVAC.

@ld321 

[ld321]

Thank you very much for the help. It is clear now. Thanks again