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Credits for Home Office or not?

A % of my Home maintenance expenses have been deducted each year as Home Office. The Home office (one bedroom) is on the premises of my condo (same building) in which I have my primary residence. When I decide to sell the condo eventually, what are my tax consequences on capital gain of the condo sale? If I want to avoid the tax consequences (if any), for how long should I NOT deduct my home maintenance expenses as home office expenses?

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1 Reply
jashley
Employee Tax Expert

Credits for Home Office or not?

There are two methods of deducting the home office: Simplified Method and Actual Method.

 

The Simplified Method allows up to 300 square feet at $5 per square foot.

 

The Actual Method allocates a percentage of your maintenance based on home office square footage versus the total condo square footage.  If you use the Actual Method to deduct the home office, you must claim the depreciation.

 

When you go to sell you condo, the previously expensed depreciation increases your capital gain.  You can avoid this by using the Simplified Method for future years.  However, you will still need to add back in the depreciation you have taken for previous years.  Depending on what you believe your capital gain in and your primary home sale exclusion, you may find this article helpful for your tax planning: https://www.irs.gov/taxtopics/tc701

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