sale of house, capital gain and home office.

[kdncc]

Hi - We sold our house in 2023. We purchased it in 2000. I am very confused regarding the home office question. My husband was an instructor and travelled and had a home office. I have been pulling taxes from 2017 back to 2000. Sometimes, the accountant listed unreimbursed job expenses, sometimes form 2106 but it looks like it was for my union dues. We both have been W-2 employees. I found a couple of 8829 forms where we wrote our notes on but cannot find that form in the actual tax return unless I did not get a copy.  The people that we worked with have retired. I see where I gave then the HOA, union dues, utilities but do not have their worksheets. I just have the actual return. Sometimes, it looked like we received money  and other times it said 0. 

I also think what you can deduct has changed over the years. Maybe the definition of home office as well. We no longer claim one.

I would really appreciate any help! 

Thank you!!!

Any ideas on where to look to pull the numbers and where to add them in the 2023 return

[MarilynG1]

The reason you are asked about claiming a Home Office Deduction when you sell your home, is that you may have taken a depreciation expense when you claimed home office expenses, which would change the Cost Basis of your home in reporting the sale and/or gain or loss.

However, if that was the case, Form 8829 would have been a part of your return, whether you qualified for the deduction or not.  

If you are W-2 employees, you may have claimed a deduction, prior to 2017, after which the home office deduction was no longer available for W-2 employees.

Other than that, the Home Office Deduction has not changed substantially, and the amount of depreciation that you may have claimed would not impact the sale of your personal residence, with the Home Sale Exclusion applied.

[kdncc]

Thank you! Do you know what line I can look at? It seems like different accountants and tax repairs did it different ways and I’m just at a loss. I don’t think it will affect my capital gains, but I want to make sure I document it properly. I always found it under job expenses on schedule a. Sometimes they were my Union dues though and not related to my husband‘s office. It was really a place to grade papers and to prepare lessons not having a home office like we had our own business. He was a traveling instructor and did not have an office of his own. I also noticed different preparer would call it unreimbursed  Job expenses or expenses or job expenses or business expenses. Thank you!

[KrisD15]

As an employee, and not Self-Employed, the expenses would have been listed as an employee expenses on Schedule A each year and would have been bundled with other job related expenses. 

There would not be a running total documented the way a self-employed taxpayer would. 

As stated in an earlier answer, that deduction was eliminated years ago, however, none of that even matters in your situation. 

If you were not self-employed and did not file Schedule C with a home office, there would be no depreciation and nothing you need to document in regard to the house sale. 

[kdncc]

Thank you both for the help! I dug through my old taxes and there were only issues with three of them. I actually think my tax preparer did them incorrectly unless the laws were different back then. We have always had a home office as my husband was an instructor as I said. In 2001 I found it form 8829, but there was no schedule C attached. The second page under part two deductible expenses was the only part filled out with allowable expenses for business use of home at $1128 . In 2002 it was done the same way with line 34 allowable expenses for business use of home 1548 and no schedule C. In 2003, there was an 8829 was filled out a lot more thoroughly and there was a schedule C on the first part line 31 it actually says -656. I’m not sure why it is a loss. The business percentage on the 8829 is 20%. There is also a 2003 depreciation and I’m authorization report for the Home office listing a life of 27.5 and an amount of depreciation of $899. I don’t think she did this correctly but I also don’t want to be audited so I want to put down the right numbers for the TurboTax question did you ever have a home office and what was the depreciation? Thank you so much for all of your help! 

[DianeW777]

First the home office depreciation deduction you would have used would have been a 39 year recovery (not 27.5 year which is reserved for residential rental property only).  The home office is considered a 'nonresidential' property for the office itself.  For each year you did use the home office expense in your business you can easily calculate the depreciation that you would have used on your tax return.

• 20% of the cost of the home as listed on your 8829 x the percentage for each year you did take a depreciation deduction on your Schedule C from the MACRS chart for nonresidential property (included below). You can add the percentage from the chart for each year then take that total times the cost.  There should not be any portion of the land as part of the home office cost basis.

Once you arrive at the depreciation you actually used on your prior tax returns you can enter that figure when asked in the Sale of Home. If you have a higher figure from your actual returns than you calculate from the chart, you must use the higher number.

@kdncc