Home office or not

[OldJack]

Section 280A also applies to the rental of vacation homes. Is a vacation home an “office in home?” No.

Section 280A also has application to a storage area where the taxpayer stores inventory or product samples.

Section 280A also comes into play for day care facilities.

I agree and was fully aware of the other applications of 280A but I made no reference as they were not applicable to the issue being discussed. Also you will note that those are again concerning the deduction of personal living and home expenses because that is the only application of code §280A.

You might also want to review Tobin v. Commissioner, T.C. Memo 1999-328

Yes, and I again note that the conservatory is within the residential unit and did not meet the exclusive use requirements to deduct the personal home expenses. The expenses the conservatory was trying to deduct were not ordinary business expenses. I also note.. quote: "Section 280A bars business deductions for a taxpayer's residence, unless an exception applies."

I have not and do not dispute or disagree that code §280A applies when any business using a portion of the taxpayers residential unit where the business is trying to claim what would otherwise be personal type home expenses. Most but not necessarily all court cases are about an "office" type use or rental of a dwelling unit (vacation home) and the tax issue is regarding the question: "home expenses" are they deductible as business expenses?

Maybe I should further clarify that 280A does not limit expenses allowed by code §162 (business expenses) unless they are of the type of 280A (home expenses). The conservatory in this case was being deducted as home expenses used for business which clearly comes under 280A.

Find us a court case where that "pole barn" (that you think comes under code §280A) constructed by the farm business and used by the farmer on the appurtenant farm land operation comes under 280A. Show us that 280A does not allow us to deduct the pole barn, as a business depreciation expense, on 1040 Sch-F even though Sch-F shows a loss.

[Bees Knees]

Find us a court case where that "pole barn" (that you think comes under code §280A) constructed by the farm business and used by the farmer on the appurtenant farm land operation comes under 280A. Show us that 280A does not allow us to deduct the pole barn, as a business depreciation expense, on 1040 Sch-F even though Sch-F shows a loss.

If you go back and read my posts, I make it very clear that a farm operation will never fall under Section 280A. So why would I then think a court case will show up involving Section 280A applying to a farm operation?

Do you even know what my point is?

[Jesse]

Form 8829 required?

And I suspect that the court might have ruled that the office was not appertenant, if a few factors had been othwise arranged - e.g., separate metering of utilities, not fenced in behind the house, driveway & parking for the office structure, etc.

What if I only have a 150' x 100' lot w/ a side by side triplex in a commercial area and so I move into one side of the triplex, rent out one apartment and turn the other side into the business? There is one building with all expenses metered and billed seperate with the one exception of the property tax bill. There is a paved parking lot in the the front for business and a driveway and garage in the back for tenant. Do I need to file a form 8829?

If I sell what portion of the building is subject to section 121 exclusion?

[Bees Knees]

What if I only have a 150' x 100' lot w/ a side by side triplex in a commercial area and so I move into one side of the triplex, rent out one apartment and turn the other side into the business? There is one building with all expenses metered and billed seperate with the one exception of the property tax bill. There is a paved parking lot in the the front for business and a driveway and garage in the back for tenant. Do I need to file a form 8829?

If I sell what portion of the building is subject to section 121 exclusion?

A triplex is three equal sized dwelling units. If you live in one, the other two are not appurtenant to the unit you live in. They are equal to your living unit, thus Form 8829 is not needed.

Same would apply to a duplex. Two equal in size units. One rented, the other you live in. Section 280A does not apply.

The portion used as your personal residence gets the Section 121 exclusion. The business portion does not.

[OldJack]

If you go back and read my posts, I make it very clear that a farm operation will never fall under Section 280A. So why would I then think a court case will show up involving Section 280A applying to a farm operation?

Do you even know what my point is?

your prior quote: "A pole barn on a half acre lot that is the same lot as the taxpayer's residence will ALWAYS be subject to Section 280A if that pole barn is appurtenant to the house. It does not matter whether the business operating out of that pole barn is an office, or an auto repair shop, or a lawn care service. The determining factor is the relative size and importance the pole barn has to the residential unit."

Are you now saying that your previous quote regarding the "poll barn" (that I show here) is not your position? You still think that the size of the property itself is the controlling factor of appurtenance referred to in code 280A?

If the residence yard is 5 acres and the farm operation is on 1 acre (hog, chicken, or feed lot farming) do you now think the farm buildings are appurtenant to and limited to sec. 280A. However, if the residence yard is 1 acre and the farm buildings and operation are on 159 acres, then you say it is not appurtenant according to your determination of size. How are we to make a decision if you are not available and we have no regs, rules, court cases, or whatever to guide us?


Sure I understand your point. You appear to think code §280A applies to limiting more than personal residential expenses.

You fail to recognize that "radio repair shop expenses" are not personal residential expenses under code §280A.

Yes, I get your point. Your thinking on these points and code §280A are mislead and flawed.

[OldJack]

A triplex is three equal sized dwelling units. If you live in one, the other two are not appurtenant to the unit you live in. They are equal to your living unit, thus Form 8829 is not needed.

OK... I simply can not keep from asking. What is your determination if the rented triplex units are each twice the size of your residential unit? or each half the size?

[Bees Knees]

If you go back and read my posts, I make it very clear that a farm operation will never fall under Section 280A. So why would I then think a court case will show up involving Section 280A applying to a farm operation?

your prior quote: "A pole barn on a half acre lot that is the same lot as the taxpayer's residence will ALWAYS be subject to Section 280A if that pole barn is appurtenant to the house. It does not matter whether the business operating out of that pole barn is an office, or an auto repair shop, or a lawn care service. The determining factor is the relative size and importance the pole barn has to the residential unit."

In Minnesota, farm operations take up more than a half acre lot.

How big are the farms in your part of the country?

If the residence yard is 5 acres and the farm operation is on 1 acre (hog, chicken, or feed lot farming) do you now think the farm buildings are appurtenant to and limited to sec. 280A. However, if the residence yard is 1 acre and the farm buildings and operation are on 159 acres, then you say it is not appurtenant according to your determination of size. How are we to make a decision if you are not available and we have no regs, rules, court cases, or whatever to guide us?

In Minnesota, farm operations take up more than a one acre lot, including hog, chicken, and feed lot farming.

How big are the farms in your part of the country?

Sure I understand your point. You appear to think code §280A applies to limiting more than personal residential expenses.

Code Section 280A(f)(1)(A), “The term “dwelling unit” includes…all structures or other property appurtenant to such dwelling unit.”

You see, there is no difference whether your photography business is located in your basement, or a separate structure in your back yard that is “appurtenant” to your residence. The code treats both the same, with the exception of Code Section 280A(c)(1)(C) which says the separate structure does not have to meet the principal place of business test. Otherwise, the separate structure still falls under Section 280A for purposes of the loss limitation rules.

You fail to recognize that "radio repair shop expenses" are not personal residential expenses under code §280A.

The depreciation, insurance, utilities, and other common expenses that are a part of the dwelling unit expenses are indeed limited under Section 280A, if that radio repair shop is located in a pole barn in the taxpayer’s back yard, and the pole barn is appurtenant to the taxpayer’s house.

I never said the supplies, tools, or other expenses used in the radio repair shop business would fall under Section 280A.

Is that where you have been confused?

[Bees Knees]

OK... I simply can not keep from asking. What is your determination if the rented triplex units are each twice the size of your residential unit? or each half the size?

Triplex units in Minnesota are generally equal in size. Are there huge variations in size in your part of the country?

[abby]

curious, really, that's all

Triplex units in Minnesota are generally equal in size. Are there huge variations in size in your part of the country?

My Dad owned a house on Lyndale Ave in Minneapolis with two large apartments on Floor One and Floor Two and then a cosy nook of an apartment on the Third Floor - you know low ceilings, attic like, but definitely a living space.

Over the years, he and his wife lived in the First Floor apartment and then the Third floor nook and back again - the other units were always rented when not owner occupied.

Is there really going to be a difference in treatment because of the size of the unit?

I'm not weighing in on either side of this issue, I can't play in the majors, but it never occurred to me that the size would matter in a circumstance like this.

[OldJack]

Is that where you have been confused?

I have never been confused... mixed up & forgetful sometimes but never confused.

Your conclusions of what is under code §280A and what is not is the only thing confused around here.

Minnesota obviously is unique and apparently so are your application of the tax laws. You should remember in your determinations of the tax code that not everyone is a resident of Minnesota.

You obviously have a fixed opinion on code §280A so I will let you have the last word ... I am out of here.

[Bees Knees]

Is there really going to be a difference in treatment because of the size of the unit?

Duplexes and triplexes are considered “separate units” if they each have separate entrances, separate kitchens, separate bedrooms, and separate bathrooms.

The Bed and Breakfast case that Old Jack found, however, fell under Section 280A because the rooms rented out were part of the same dwelling unit. They shared common areas with the taxpayer’s residence.

A boarding house could fall under Section 280A if all of the tenants share the same kitchen and bathroom with the taxpayer’s residence.

[Bees Knees]

You obviously have a fixed opinion on code §280A so I will let you have the last word ... I am out of here.

The reason there are so many tax court cases each year is because people like you and me don't always agree on the interpretation of the code. Until a court case comes right out and applies Section 280A to a "radio repair shop" operating in a pole barn in somebody's back yard, I suspect your opinion will remain fixed too.

I look forward to our next “opinion” exchange.

[OldJack]

The Bed and Breakfast case that Old Jack found, however, fell under Section 280A because the rooms rented out were part of the same dwelling unit. They shared common areas with the taxpayer’s residence.

Correction.. a portion of the B&B building (rental units upstairs) was not considered under §280A as there was no mixed use and a portion of the building was code §280A.