i own my own home and are self employed. i want to be able to lower my taxes and my qccountant tells me i may claim an in home office deduction beginning this year 2007. i have lived here for five years and plan to sell hopefully in 2008, but no later than 2009. my dad who is a electrician told me the accountant is not giving me good advice. what do you guys (and girls) think... I make a few bucks and would really like to keep my tax paid to a minimum.
2007-04-03 07:58:43 · 3 answers · asked by amazed 3 in Business & Finance ➔ Taxes ➔ United States
You can claim your office as a deduction,
it must be a dedicated space. determine the total square feet of your home then the square feet of your dedicated office. divide the house by the office and this will give you the percentage of use. Use this percentage for all house hold bills. ie gas, electrice, ins. etc. this is the allowed amount, however you may also have to deal with depreciation. which means the you deduct that amount of depreciation. Catch is when you sell the house (usually for more then you paid for it) then you have reverse the depreciation. For a very small $$$ business this may be an option but you should figure out the amounts completely to determine if this is a feasibiliy for you. Mind you I am not an accountant, and this is only recollection from a couple of tax courses. I work out of my home and don't bother with it. All in all i would agree with your dad. But that is strictly a personal opinion. The best advise is to look up the information on in home office deductions at www.irs.gov that will give you the details of doing what your planning.
2007-04-03 12:37:01 · answer #1 · answered by Donald C 3 · 0⤊ 0⤋
You may be able to claim a portion of your home (and related expenses - electric, heat, water, taxes, mortgage, etc.) as a business expense.
BUT - doing so causes that portion of the home to become business property. When you sell your home, the gain on that portion will be fully taxable. It cannot be excluded the way the gain from a personal residence can be.
2007-04-03 08:21:14 · answer #2 · answered by Susan S 2 · 1⤊ 0⤋
If you do take the home office deduction for space in part of your home, it will complicate your taxes when you go to sell - if you're planning to sell soon, it might not be worth it.
2007-04-03 08:19:24 · answer #3 · answered by Judy 7 · 2⤊ 1⤋