Home Office Deductions?

[Jeff D.]

I've converted an old bedroom in the house,into an office/computer room.Although it isn't used exclusively for work,I do use it as an office,and I was wondering about writing it off on my taxes.

For those who've used this deduction,how is it calculated,by % of total house square footage?Do you write off a % of the heating bill,and electrical also?
If your claiming X% of your morgage as a business expense,what happens if the house is sold?Do you then have to claim X% of the house sale price as capital gains in your business?

I want to claim as much as I can,but don't want to throw up any flags for the IRS,or make it messy if I decide to eventually sell.

Thanks for all input.

 

[digger242j]

I am by no means an expert, but I have heard that the "office in my home" deduction pretty much is a red flag all by itself.

 

[Steve Frazier]

I've been claiming it since I started my business many moons ago and have had no problems. I'm not exactly sure how the percentage is calculated, my accountant handles it, but this past year we've increased the percentage as my paperwork has spilled over into the dining room.

All household expenses then become a deduction at the same percentage as the office allowance, ie, your fuel oil, electric, etc. I use Quickbooks to keep track of all my data, and the just click a profits and loss report for my accountant. With the ever changing tax laws, it's easier and more accurate to let him do my taxes and well worth the fee I pay him.

 

[salesrep]

% of space used. Write off the whole bedroom (move out thebed if audited ) . If it is 13% of your home then deduct 13% of heat,elec,ins,phone,water,mortgage. Write off the entire internet,computer,software, anything related to biz.
Entertainment. Ever buy lunch or a round of beers for clients of fellow contractor?. Write it off. The irs doesn't require reciepts for smaller entertainment dollars. Office supplies. Postage,education,classes, work vehicle. To name a few.
Not sure about the cap gains and resale, but I do not think that comes into play.

 

[CT18fireman]

I pretty much do the same as Steve does. I count percentage of the basement office area as well as barn, shed garage thing I have on property (not the attached home garage where my wife parks). I use quickbooks, enter everything in and let my accountant figure it out.

 

[norrodbh]

I have a dedicated Office in my house.

My CPA talked me out of writing off the home expense.

I just write of the phone lines & internet stuff.

The main reason she used is the write off depreciates, and upon selling the house... Any amount over the depreciated amount will be Capital Gains.

The second reason was IRS - Red Flag.

DO NOT TAKE THIS AS TAX ADVISE. Only your CPA knows for sure.

 

[Jeff D.]

The main reason she used is the write off depreciates, and upon selling the house... Any amount over the depreciated amount will be Capital Gains.

The second reason was IRS - Red Flag.

These were the two things I was afraid of.

A guy shouldn't have to worry when taking legitamate deductions,but he also shouldn't have to worry about "everything else",if the IRS were to come sniffin' around either.I think I'll keep it as an available option,if the taxes don't come in where I expect them too this year.

Thanks everyone,for the responses!!