Self Employee expenses

[fernando1957]

SITUATION: We (myseld and my wife) are self employees, in two different business. Each of us has our own office in our owned house, so we do Home Office deductions for each of us.

Due to an hail Storm we had to replace my entire roof. Insurance covered part of the expenses, but still I had around $15.000 out of pocket expenses. This was not a federal declared disaster, no FEMA involved.

QUESTION: Is it possible to put those roof expenses under the home Office expenses, and if yes do we do in one home office or in both home office expenses?

Thank you

Fernando

[James-B]

Hi @fernando1957

This is a great question.  To answer your question, we’ll have to take a look at Publication 587 – Business Use of Your Home.  In the publication you will find a section related to which actual expenses are allowed to be taken for your business (the section is called Figuring the Deduction). 

In a nutshell, you must divide expenses related to your home between the business use and personal use.  So, for the roof it would only be the section of the roof that covers your business.  It is also considered a Direct Expense, since it is a repair that needs to happen for your business to operate properly.  Since this is a repair and not an improvement, it would be considered deductible (see the publication for the difference and impacts).  Remember, you can’t claim any portion of the expenses that were reimbursed by the insurance company but can split the remaining cost between personal and business use.

I have listed the IRS link to eh publication below.  If you search for the word “roof”, you will find some exact references to roof repair and allowable deductions.

Publication 587 (2021), Business Use of Your Home | Internal Revenue Service (irs.gov)

I hope this helps!  Please let me know if you have any other questions and have a great day!