Deducting depreciation for a home office
May 07, 2012
People who work from home have the opportunity to claim a range of tax deductions under the "regular and exclusive use" rule for an area of their residence that they use exclusively for work.
As financial planner Erin Baehr writes for the Pocono Record, "If your business telephone line is in your home office, your files are in the home office and you otherwise conduct your activities, scheduling and management at home ... you likely would qualify for a home office deduction."
In addition, those who work from home are also permitted to deduct depreciation
. In order to calculate depreciation
, the value of the property at the time the home office began being used must be known and then deducted over a period of 39 years.
Permanent home improvements should also be depreciated, rather than deducted all at once in the year they are completed.
Despite many people's misconceptions, every home-based business - regardless of its profitability - must file a tax return. Small business owners can claim deductions for depreciation and amortization using Form 4562.