How to depreciate building improvement to home office

[wlangshaw]

We have an exterior home studio (570sq/ft) that wife uses 100% for her self employed business.

We made substantial improvements ($20k) to the building so she could use it for her business.  

We replaced the roof, changed the windows, add new siding. 

How can we write this off or depreciate the expense? Please tell me how/where specifically in turbotax we enter these costs.

Thanks

[Irene2805]

If any of the improvements are $2,500 or less you can elect to expense them using the De Minimis election.  Improvements more than $2,500 should be assets and depreciated over time.  The following instructions are for TurboTax Home & Business.  If you'd like step by step instructions for TurboTax Self-Employed, please respond back in this thread.

Part 1.  Make the De Minimis election

1. Click on the Business tab > Continue > I'll choose what to work on  [Online:  Serlf-Employment > Self em
2. In the Business Income and Expenses section, click the Start/Update button.  
3. If you have already started adding information about your business, you will see the Here's the business info we have so far screen.  Click on Edit next to your business.
4. If you haven't already started adding information about the property, continue through the screens to enter the needed information.
5. You will now be on the Your [business name] Business screen.  
6. In the Business Assets section, click on the Start/Update box.
7. When you come to the screen, Did you buy any items that each cost $2,500 or less in 2019? mark the Yes button and click Continue. 
8. On the screen Let's see if you qualify to deduct these items as expenses, mark both of the Yes buttons and click Continue. 
9. On the screen Now, let's review each item you bought -- If you mark that every item cost $2,500 or less, you will be asked if you want to claim the improvements as expenses.  Select the No button since you're claiming them under the de minimis election.  You will be brought to the Business Summary screen.  Proceed with Step 2, below. 
10. If you mark that some cost above $2,500, proceed through the screens and answer Yes on the screen Do you have any items that aren't covered by your elections?  Proceed through the screens to enter these assets. 

Step 2.  Enter your election-related items as other expenses.

1. On the Your [XX] Business Summary screen go to the Business Expenses section and click on the Start/Update box next to Other Common Business Expenses. 
2. On the next screen, Let's write off some business expenses, scroll down to Other Miscellaneous Expenses screen and click on the Start/Update box.  On the screen Any Miscellaneous Expenses? enter the description and amount paid for the assets. Click Continue when finished.

[Carl]

Since chances are that none of your property improvements are 100% business use, the safe harbor election is just not an option.

Now if the building is physically separate from the residence, you could be claiming that building all by itself at 100% business use. If this is the case, then safe harbor is an option as all property improvements to "THAT" specific building would also be 100% business use.

Property improvements are entered in the Business Assets section and will be depreciated over 39 years. Make sure you indicate the correct business use percentage of the asset too. Some examples.

Example 1: You have a room in your house designated as a home office. It occupies 5% of the floor space. Therefore the property is 5% business use.

You put a new roof on the house at a cost of $10,000. Enter that new roof as a business asset and indicate it's 5% business use.

You installed new windows throughout the entire house at a cost of $3000. Enter it in the business assets section and indicate 5% business use.

Example 2: You installed new windows throughout the house at a cost of $3000. With a total of 30 windows replaced that's $100 per window. Three of the 30 windows were installed in the home office. You'll enter two asset entries for this.

One asset entry will be for $2,700 for the 27 windows installed in the non-business portion of the house, and business use percentage is zero percent. Another asset entry will be for $300 for the three windows installed in the home office room, and business use percentage for those three windows only will be 100% (one hundred percent.)

In my personal opinion, things will be simpler for you in the long run if you enter the windows as a single asset with 5% business use.

[wlangshaw]

Yes. This is an exterior building 100% for business use.  So, it sounds like I can count improvement materially and physically part of the building as business assets?