<p>Recapturing the depreciation in the sale of a home is one that had 90% audit letters to our district last year, and that is reason enough to reconsider whether the office space is really worth it.</p>
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<p>True, but the numbers probably won’t make it worthwhile.</p>
<p>Depreciation is figured by taking the FMV or basis in the home, whichever is less. Figuring the percentage of the room and dividing by 27.5.</p>
<p>Fendergirl: I was trying to say that it probably won’t be worth it even if it exceed the 2% because you already get the interest and taxes. You just move that portion to another line. And the depreciation has to be recaptured and when you sell the house that portion is now taxable. Figure it out without moving the interest and taxes and see if just utilities and other costs make it worthwhile. If not, I wouldn’t do it</p>
<p>I think someone already mentioned it, but there are tax consequences when you sell your house if you depreciate.</p>
<p>^Yes, although I also believe I’ve read that if you decommission your office for five years before selling it you don’t have to worry. Anyone know if that’s true? I’m remembering seeing this from when we sold our first house.</p>
<p>i currently have about 250 a month going towards the mortgage principle, so a year of that comes out to 3000. electric averages about 100 a month and heat, while seasonal, probably works out to be about 100 a month with the current cost of oil. so that’s 2400 there between those two. I’m not sure what other utilities can get put in. 5400 x 8.5 percent is about 450 dollars which is less then 2 percent so like you said it may not even be worth it.</p>
<p>i still don’t understand the depreciate the office thing - am i supposed to say like oh… i’ve walked on the floor 5 times per day so that’s 50 dollars per year of damage to my flooring???</p>
<p>Depreciation has to happen and it is an automatic formula. Have you considered having your taxes done professionally this year so you can go over the pros and cons of doing the claiming the home office? If not, please read the publication carefully. So many people end up claiming deductions that they don’t earn, and then the IRS comes after them for interest and penalties.</p>
<p>I’m thinking there won’t really be any advantage to claiming the office. My taxes are fairly straight forward - w2 earnings, student loan interest, mortgage interest and taxes, bank account interest, and charitable donations. I mean, they are complex enough that I itemize, but not complex enough to pay a professional. I know that if i could claim the office the program I use takes you through calculating everything but it just sounds like it’s more hassle then it’s worth (which seems like it would be next to nothing).</p>