Put a new shop up this yr. Attached to house (replaced the old carport/garage). New structure still has overhead garage door but is wired and plumb for, and will be used as a shop for my small business.
Possible to write off the cost of building it as a business expense? I already use my home as business office.
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I've got a similar situation. Deduct up to 25% of your mortgage and utilities based on the percentage of sq footage used for business - at least that's what my accountant tells me.
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What about the actual cost of construction , any write off there?
Thius is a Q for your accountant. Lot of ways to do it, depending on your business tructure and your future plans. For me, with a corp. it works best to rent the space to the business.
If you write it down and then sell the real estate later, the book-keeping gets VERY complicated. they want the money writtenn off writen back against the profits made.....
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they want the money writtenn off writen back against the profits made.....
Depreciation is a two-edged sword. I got cut on the back-swing once. Never again. Talk with your tax advisor.PAHS Designer/Builder- Bury it!
Seayou and Vatom are both right. The deduction is great , on the front sided. The back side is that when you sell you home, all those depreciation write-offs are then added back into the profit of your home when you sell. You might be ok if you don't make a "jointly filed" combined profit of $250k, but now a days that might be hard
I believe that if you don't write it of for 2 consecutivve years and then you sell, it may not affect you, but i'm probably wrong?
As others suggested, better to talk to a CPA, not just a tax preparer
"As others suggested, better to talk to a CPA, not just a tax preparer"And make SURE that long term consequenses are discussed!
Rich BeckmanThis signature line intentionally left blank.
Same advice as above. See a CPA. Get a plan together for the long haul. There are many ways to handle this and finding the best one for you is where it is at.
I am like Piffin. No, I don't mean I make a lot of money, live in a mansion or have a really nice truck. I mean I am structured with a corporation. I buy the buildings myself and rent them back to the business. Dan
I don't mean I make a lot of money, live in a mansion or have a really nice truck either, but if I can keep the tax man from taking too much, I might someday
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I wasn't meaning to offend. I was just joking. I never met a successful contractor yet that claimed to make any money. So I through that in as a joke. DanT
no offense taken - just didn't want others to misunderstand about how much Taunton pays me here!;)
Welcome to the Taunton University of Knowledge FHB Campus at Breaktime. where ... Excellence is its own reward!
You can depreciate the cost of building the shop over 39.5 years. It is treated just like your other office in home.....a percent of the interest, taxes and utilities.
Another point - if you take a business deduction, depreciation must be taken. It is allowed or allowable....that is, if you don't take depreciation, when you sell , IRS could calculate your tax as if you had taken the expense and make you pay the tax on it. Recapture of depreciation is 25% up to the profit you make on the sale.
You get out of life what you put into it......minus taxes.
Marv
Thank to All for the advice.
I will be seeing the accountant after the first of the yr.