Simplified OIH remodel

[rtsietsema]

New client who has used the simplified deduction for Office in the Home in past years. I have verified that the 220 square feet they use meet the requirements for the deduction.

They also come with about $500 of remodeling expenses exclusive to the Office. Not a problem to deal with when using actual expenses. But with the Simplified method, I’m not sure anything would be allowed. I’ve checked TTB, but saw nothing to address this situation. Saw nothing in Publication 587 either, at first glance. Any insight is appreciated.

[TaxGuyBill]

I agree, it would not be allowed if using the Simplified Method. It may be a good idea to try the Actual Expenses this year.

[Lion]

If the square footage didn't change, then the simplified method of OIH won't give a different amount.

Was $500 really a remodel? Or, just a repair or maintenance? It cost me $500 to have our guest room painted; so even though that was not a business expense, it does show how far $500 goes. Not very far. I couldn't remodel my home office (spare room) for $500.

[Rapid Robert]

I agree, it would not be allowed if using the Simplified Method. It may be a good idea to try the Actual Expenses this year.

Also agree, nothing allowed under Simplified Method. If it was a good idea to use Simplified Method prior to this year, I don't think the annual depreciation at 39 years on $500 is going to change that, although some might argue that the full $500 could be deducted, but I'm not sure under what law or reg. Remember that depreciation taken can be taxed later, in year of disposition, at up to 25% federal tax, and not excludable under Sec 121.

[rtsietsema]

Thanks

Thanks to all who responded. It echoes my thoughts. The $500 couldn’t have done much, and won’t save much either when you add in the extra time for me. The client also hinted at suspending this business in a few years, which also is a good reason not to pursue actual expenses.

Thanks,