3 Comments so far

1. Spock (rhp) had this to say about the topic:

   exactly so .. form 4562
   be warned that doing so has an effect on your future gain from sale of the property [if any] and the amount of taxes you’ll pay if and when that gain occurs. In brief, the portion of the property used for office in the home is treated as a capital asset and the gain thereon is taxable, after adjusting your basis (on that portion only) downward for the amounts of depreciation allowable over the years.

2. StephenW had this to say about the topic:

   Depreciation, maintenance, insurance, real estate taxes, and utilities (heat and additional costs for second telephone lines or for long distance, but no part of the base cost of the first telephone line to a residence).

3. Sarah had this to say about the topic:

   I think you’ll need to consult an accountant on this one! I had a home office which I used to deduct back in the early 1990s, and I had to have an accountant do it because it was so complicated. It went by the square footage of that room as a percentage of the total square footage of the house — then he said I couldn’t use the room for anything else (which I didn’t) and then he did his math. It wasn’t just the mortgage, though, there were other things like property tax, electric bill, etc. I could claim a percentage of those things (based on the square footage of the room). I think what you can do (but I’m not an accountant so I don’t know for sure!) is take the price you paid for the townhouse, then figure out the percentage of that (based on square footage) that your office is (for example, if you paid 200,000 for your townhouse and your office square footage is 10% of that, your office would have cost you 20,000 dollars). Then you would claim that 20,000 as a capital purchase of your business — but you’d have to do it over a period of years — maybe 1000 a year for 20 years? I’ll be checking back because I’m interested to know what a real accountant would say to this one!