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  1. #1
    Residential and Commercial Pressure Washing Specialist and International Word Mark Expert! Honorary Professor Mark 8262's Avatar
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    Home Office Tax deduction - Garage?

    I'm getting my stuff together to take to my accountant. I have an office at home that is dedicated to my office and serves no other purpose, so I deduct this on my business taxes.

    I use my garage for no other purpose than my business. I have a separate storage shed for my personal items. Do any of you deduct your garage as a business expense?

  2. #2
    Moderator 11000 PLUS POSTER Christopher's Avatar
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    You have to be careful when doing those types of deductions, check with a CPA first.

    I do not deduct my den as an office because if you sell the house, there are different tax things you have to know about that office for tax purposes and other stuff. I did not want to mess with all that stuff.

    My CPA does not do too much in the gray area and is overly cautious of things that will flag you for audits so I am just extra careful but that is just me.



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  3. #3
    Member 2000 PLUS POSTER
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    We have a 1200sqft office/warehouse, so we dont work out of the house, but Our CPA said yes to those questions when we were. Then again, we're in Texas.
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    Moderator Honorary Professor Matthew Norman's Avatar
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    I was thinking about this the other day I almost asked the same question.

  5. #5
    Moderator Professor with Tenure David O'Connell Jr's Avatar
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    Not worth an audit. Just my opinion.
    David O'Connell Jr.
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  6. #6
    Cleaning with Aloha Graduate Student ckingclean's Avatar
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    I have an area on the property that is dedicated to parking work vehicles and a 40ft storage container. I also have a room dedicated to home office. I write off all of this area. CPA agrees with it as well.
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    Cleaning with Aloha Graduate Student ckingclean's Avatar
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    I don't own, I rent my house and yard. I justify it because I legimitately rented a large property with yard space for business purposes only. This made more sense than a separate space. If the space is dual purpose that's another thing, but if it is legimitately business only, you have to write it off.
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    Member Junior Undergraduate MMI Enterprises's Avatar
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    I am with most in that it's not worth the potential hassle when most have plenty of other deductions to wipe away tax burden.

    Clean King, where is it said you have to do a write off?
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  9. #9
    BS Detector, Esquire 10,000 PLUS POSTER Tony Shelton's Avatar
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    Already been through it. If the city counts the garage as square footage in the home you can write it off fully as home office area.

    Our auditor allowed the full writeoff even on a portion of the garage that was NOT included in the city plans, but was finished inside. He gave us a partial writeoff for the garage and NO penalty for claiming the FULL writeoff for the garage.

    Annually we legally write off almost half our home and it's been tested by a full audit (three weeks worth).
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  10. #10
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    If you write off home office space when you sell the house the portion you wrote off on your taxes will be depreciated. You could then end up paying taxes on that portion then.
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  11. #11
    Moderator 11000 PLUS POSTER Christopher's Avatar
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    Quote Originally Posted by Doug Dahlke View Post
    If you write off home office space when you sell the house the portion you wrote off on your taxes will be depreciated. You could then end up paying taxes on that portion then.

    That is what my CPA mentioned but I did not remember until this post.



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  12. #12
    Cleaning with Aloha Graduate Student ckingclean's Avatar
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    Quote Originally Posted by MMI Enterprises View Post
    I am with most in that it's not worth the potential hassle when most have plenty of other deductions to wipe away tax burden.

    Clean King, where is it said you have to do a write off?
    My accountant says that it is illegal to not claim deductions for business expenses.
    Last edited by Scott Stone; 10-31-2009 at 03:55 PM.
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  13. #13
    Member Junior Undergraduate MMI Enterprises's Avatar
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    Interesting..anyone else ever hear or can confirm that with their cpa advise or irs regs?
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    Member Graduate Student Clear Shine's Avatar
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    I think it also might veary state to state also. I know I am allowed a certain % off of my house payment and utlilites for my at home office....Just ask your CPA and she/he can lead you in the right direction. AND, for the love of GOD, please please please DO NOT GO to a H&R Block or Jackson/ Hewlett type place to get your taxes done. If they do not have the title CPA in there title, find someone who does....

  15. #15
    BS Detector, Esquire 10,000 PLUS POSTER Tony Shelton's Avatar
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    Quote Originally Posted by Doug Dahlke View Post
    If you write off home office space when you sell the house the portion you wrote off on your taxes will be depreciated. You could then end up paying taxes on that portion then.
    I've never heard of anything like that. That must be a state tax thing. The feds don't tax the sale of a home unless you profit more than $250k per spouse.
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  16. #16
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    Quote Originally Posted by tonyshelton View Post
    I've never heard of anything like that. That must be a state tax thing. The feds don't tax the sale of a home unless you profit more than $250k per spouse.
    Tony,

    Check with your CPA. I don't think it is a state thing.
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  17. #17
    BS Detector, Esquire 10,000 PLUS POSTER Tony Shelton's Avatar
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    Quote Originally Posted by Doug Dahlke View Post
    Tony,

    Check with your CPA. I don't think it is a state thing.
    It's my understanding that Publication 587 of the Tax code that deals with deductions of business use of the home says that any depreciation claimed over the "allowed" amount is taxable at the sell of the home.

    Even if that is not right, and ALL business related depreciation is taxable, you're still pushing out taxes to a future date which is usually what is advised by a good accountant.

    The first $250,000 profit on the sale of a home (per spouse) is not taxable if I understand right. Meaning that you'd have to have a home worth more than 1.4m and run your business out of you home for many years before the depreciation would even come into effect.

    Am I wrong in this?

    EDITED LATER

    It appears that after 1997 you would have to deduct your depreciation from the exempt amount of profit at the sale of the home. For example:

    Good Scenario:

    Your house is worth 300k
    You depreciate 2k per year claiming half your house. (huge)
    You sell the house after 20 years for $800k
    You've deprecicated $40k over the years.
    You and your spouse have profited $500k. You have to pay taxes on 40k of that $500k.


    Bad Scenario

    Your house is worth $300l
    You depreciate 2k per year claming half your house
    You sell the house after 20 yrs for $300k
    You've depreciated $40k over the years.
    You and your spouse profit nothing. You have to pay taxes on 40k.

    What are the chances?

    The writeoff still seems like a winner all around.
    Last edited by Tony Shelton; 02-26-2009 at 09:43 PM.
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  18. #18
    BS Detector, Esquire 10,000 PLUS POSTER Tony Shelton's Avatar
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    Quote Originally Posted by Clear Shine View Post
    I think it also might veary state to state also. I know I am allowed a certain % off of my house payment and utlilites for my at home office....Just ask your CPA and she/he can lead you in the right direction. AND, for the love of GOD, please please please DO NOT GO to a H&R Block or Jackson/ Hewlett type place to get your taxes done. If they do not have the title CPA in there title, find someone who does....
    GOOD ADVICE.
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  19. #19
    Member Sophomore Undergraduate Hook and Ladder LLC's Avatar
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    Unless you have a seperate building- my CPA recently told me claiming a room or garage only throws a red flag up. be careful.....
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  20. #20
    Member Professor with Tenure
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    My CPA was an IRS auditor for years. He too says home office deduction throws up a flag. Won't by itself trigger an audit but combined with a few other known gray areas it may.

    Never heard it was illegal to not take a deduction for certain items. Don't know anyone getting pinched for paying too much tax. With our govt I wouldn't be surprised.

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