Office in Home Deduction

[mrbill]

For 2013, there is a simplified method for taking this deduction $5.00 per SF, maximum 3,000 SF. On what form do I take this deduction ? Thanks,

[ATSMAN]

For 2013, there is a simplified method for taking this deduction $5.00 per SF, maximum 3,000 SF. On what form do I take this deduction ? Thanks,

Schedule C (Form 1040), Part II. See instructions

[zeros]

8829 Form

Check the box on form 8829.

[TaxGuyBill]

For 2013, there is a simplified method for taking this deduction $5.00 per SF, maximum 3,000 SF. On what form do I take this deduction ? Thanks,

One slight clarification: it's 300 square feet, not 3,000.

[Gene V]

Check the box on form 8829.

What box on Form 8829??

If your using the Simplified Method, you do not send in Form 8829--just inter the information on line 30 Schedule C

[taxxcpa]

What box on Form 8829??

You can enter the square feet on lines 1 and 2, then check the box just below line 2 (to use safe harbor method), then you co not need to fill out the rest of Form 8829.

I haven't used the safe harbor method yet and I suspect that most clients will get a bigger deduction by listing everything.
Of course, the recapture of depreciation in the event you sell your home could affect you. I sold my former residence and had over $30,000 depreciation to be recaptured. Since I owner-financed it, the recapture is spread over 30 years, at about 9.4% of the principal I collect each year--so it has a minor impact and is unlikely to raise my tax bracket--and I'm not likely to live 30 years from the date it was sold which leaves it for my heirs to report for part of the period--unless he refinances or inherits enough to pay it off early.

[AZ-Tax]

That is approx. a 17 X 17 room.

One slight clarification: it's 300 square feet, not 3,000.

That is approx. a 17 X 17 room. I couldn't operate in such a small area.

[ATSMAN]

My little cubbyhole is 12x12!

17x17 would be a mansion!

[Gene V]

You can enter the square feet on lines 1 and 2, then check the box just below line 2 (to use safe harbor method), then you co not need to fill out the rest of Form 8829.

You must have a difference Form 8829 then I do--No box to check under line 2 on my Form 8829

http://www.irs.gov/pub/irs-pdf/f8829.pdf

[zeros]

DRake

You must have a difference Form 8829 then I do--No box to check under line 2 on my Form 8829

http://www.irs.gov/pub/irs-pdf/f8829.pdf

That line might have been added by Drake Software for our convenience.

[jsamans]

My little cubbyhole is 12x12!

17x17 would be a mansion!

I can't get over the $5 per SQFT as a per-year valuation. In the D.C. area, it's more like $15-20.

[ttbtaxes]

You can enter the square feet on lines 1 and 2, then check the box just below line 2 (to use safe harbor method), then you co not need to fill out the rest of Form 8829.

I haven't used the safe harbor method yet and I suspect that most clients will get a bigger deduction by listing everything.
Of course, the recapture of depreciation in the event you sell your home could affect you. I sold my former residence and had over $30,000 depreciation to be recaptured. Since I owner-financed it, the recapture is spread over 30 years, at about 9.4% of the principal I collect each year--so it has a minor impact and is unlikely to raise my tax bracket--and I'm not likely to live 30 years from the date it was sold which leaves it for my heirs to report for part of the period--unless he refinances or inherits enough to pay it off early.

I haven't looked at the recapture rules for a home office but isn't the recapture amount fully reportable as income in the year of sale regardless of installment sale treatment?

[ATSMAN]

That is why the simplified method may not have too many takers??

[BOB W]

I haven't looked at the recapture rules for a home office but isn't the recapture amount fully reportable as income in the year of sale regardless of installment sale treatment?

Yup, recapture in full of depreciation in year of sale............................Not part of installment sale deferred reporting.

[TaxGuyBill]

Yup, recapture in full of depreciation in year of sale............................Not part of installment sale deferred reporting.

I agree.

http://www.irs.gov/publications/p537/ar02.html#en_US_2013_publink1000221670

Besides avoiding the depreciation recapture, the simplified option also allows ALL of the mortgage interest and property taxes to be claimed on Schedule A.