I live in San Francisco, California, run several businesses out of my apartment, and use the second bedroom as my office. My monthly rent is over $2000 and I understand that I can deduct the cost of the second bedroom from my taxes. That would save me about $12000 per year. Can I do this?
2007-12-01 13:47:24 · 8 answers · asked by Curious_Rascal 2 in Business & Finance ➔ Taxes ➔ United States
Yes you can do this but here is a warning for you. Your second bedroom can not, repeat, not be use for any other purpose. The second bedroom is strictly an office so remove TVs, and any personal stuff out. Do not store personal property either. Just imagine an office at a bank.
Then go to the IRS.gov web site and they have forms (which you will attached to your 1040 form) and pubs (download) on claiming a home office.
2007-12-02 00:26:47 · answer #1 · answered by Gary 5 · 0⤊ 0⤋
If the room is used regularly and exclusively for your businesses, then you can take a home office deduction. If you also use the room to surf the net, watch TV, or something else other than business, no.
I'm not sure how you figure it would save you$12,000 though. Your home office deduction would be a percent of the rent equal to the square footage of the second bedroom divided by the square footage of the entire apartment. Then of course the actual tax savings would be the amount of the deduction again times a percentage, your tax bracket plus the self-employment tax on that.
2007-12-01 14:46:18 · answer #2 · answered by Judy 7 · 2⤊ 0⤋
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2016-05-27 04:29:46 · answer #3 · answered by ? 3 · 0⤊ 0⤋
ya its a portion of your rent can be used as a tax deduction, but only the room you use as a office, a good rule of thumb is take the number of rooms you have total (not counting bathroom) and divide by 100- that will be the percentage of the rent you can use as deduction. It would be 25% if you have 4 rms, 20% if you have 5 rms.
Even if you think that second bedroom is costing you more- you cant deduct that amount.
2007-12-01 14:09:03 · answer #4 · answered by mary h 4 · 1⤊ 0⤋
I am not an accountant, but did run a business out of my home a while ago. At that time, I was told that I could deduct a portion of my home if that portion was used EXCLUSIVELY for the business. IF the law is the same, it sounds as if it would work for you. But be aware that home office deductions are a red flag for the IRS and greatly increases your chances of being audited, so be ready in case an IRS agent shows up at your door.
2007-12-01 13:55:36 · answer #5 · answered by Michael B 4 · 1⤊ 0⤋
You can't deduct half of the rent. However, you can deduct the portion of the rent for that room either based on the number of rooms in the apartment or by the total square footage in the apartment.
2007-12-02 01:30:21 · answer #6 · answered by Steve 6 · 1⤊ 0⤋
This is taken directly from the IRS website:
In order to claim a business deduction, you must use part of your home:
Exclusively and regularly as your principal place of business, as a place to meet or deal with patients, clients or customers in the normal course of your business, or in connection with your trade or business where there is a separate structure not attached to the home; or
On a regular basis for certain storage use such as inventory or product samples, as rental property, or as a home daycare facility.
2007-12-01 14:12:39 · answer #7 · answered by Leroy K 4 · 1⤊ 0⤋
Sure, if you can prove you use that space to store business related material.
2007-12-01 13:58:28 · answer #8 · answered by Hirise bill 5 · 0⤊ 1⤋