From what I understand, there are Michigan tax laws allowing deductions for renters and lendees, but what about those responsible people who have chosen not to live their lives in debt (i.e., have no mortgage or rental dues)? Are they just out of luck?
2007-10-12 01:11:47 · 4 answers · asked by swollen_goat 2 in Business & Finance ➔ Taxes ➔ United States
Does anyone know of a web resource that details this specific situation?
2007-10-12 02:44:14 · update #1
You can take a depreciation deduction as part of your home office deduction for the portion of your home used exclusively for business. You do NOT need to pay yourself "rent" to get the deduction.
Keep in mind that when you sell your home, the amount of depreciation allowed OR ALLOWABLE will be recaptured and will increase your gain on the sale. That recapture is taxable income, even if you qualify for the exclusion of gain on sale of a personal residence!
2007-10-12 01:44:05 · answer #1 · answered by Bostonian In MO 7 · 1⤊ 0⤋
It does not matter whether you own the home with or without debt. If you are using part of your home for business purposes, that part can be deducted as a business expense. The IRS has guidelines about figuring out the deduction, and also criteria to determine if the deduction is allowed. For example, you may have to have a specific part of the house used only for business, such as a room you use as an office.
The deductions amount to a portion of the utilities, insurance, maintenance, and property taxes you pay. You can also depreciate that portion of the home used for business. The depreciation adjusts the cost basis of your house, so you have to keep careful records in the event that you sell the house in the future.
2007-10-12 08:34:06 · answer #2 · answered by Anonymous · 0⤊ 0⤋
The other answers are correct - however, be vary careful. Anything deducted as a home office/business must be used 100% for the business.
I.E. you have a computer for your business, you can not play games or other personal business on that computer. Your office doubles as a guest room? then you can not claim that space as a business.
Per the IRS - anything deducted as a business must be 100% for the business.
2007-10-12 08:55:57 · answer #3 · answered by randomtulsa 1 · 0⤊ 0⤋
Only if you collect the rent from your business and show that as your income, and then deduct the rent as the business expense.
So you already knew: "They (responsible people) are just out of luck?"
2007-10-12 08:28:20 · answer #4 · answered by MukatA 6 · 0⤊ 1⤋