Lynn D'Avolio
Coldwell Banker Residential Brokerage | 801-597-2857 | lynn1@soldbylynn.com


Posted by Lynn D'Avolio on 6/6/2017

If you work from home either full or part-time, you may want to give the home office deduction a go on your taxes. The problem with this deduction is that it can be tricky. 


Are You Eligible?


Your workspace needs to meet the criteria for business use. You need to use your work space regularly and as your principal place of business. If you don’t work from home as a self-employed individual, your employer must require you to work from home due to a lack of office space or other circumstances. The keywords in this part of the clause are “exclusively, regularly, and must.”


First, you’ll need to calculate the percentage of your home that’s used for business. This means that if your office is 100 square feet and your home is 1,000 square feet, you use 10% of your home for business. If you own the space you’re living in, you can deduct 10% of the mortgage interest that you pay each month. Keep in mind that you can’t double dip either. This means the amount of mortgage interest that you deduct on other parts of your taxes is reduced. If you rent your home, you’d deduct the percentage off of your monthly rental payments. 


Home Office Maintenance


If you own your home, you are able to deduct a portion of your property taxes, insurance, utilities, maintenance, and other expenses that are associated with your home office space. These expenses vary because some are direct such as the expense of you painting your office. Others are indirect. Home insurance applies to your entire home, so you would only apply a portion of that to a deduction. For the direct expenses, you are able to deduct the entire cost. 


For the indirect expenses, you’ll go back to applying the percentage of your home that is used for work. This means if we’re working with a 10% figure, you are able to deduct 10% of your utilities, 10% of your home insurance premiums, and so on.


If you rent, you can still deduct many of the same things that homeowners can from your taxes for a home office expenditure. The only thing that you’ll lack as a renter is the ability to write off things like mortgage interest, property taxes, and homeowner’s insurance. Know that you’ll be able to write off a portion of your renter’s insurance. 


The Complicated Stuff: Depreciation


You are able to depreciate the value of a home office as your home ages. It’s not always necessary to do this, so you should consult your tax professional before you decide to make this type of deduction. Equipment in your office, such as your computer, can be claimed as a depreciation over time as well. 


The important thing when it comes to your home office tax deduction is to do your homework. You don’t want to miss out on important savings!




Categories: Uncategorized  


Posted by Lynn D'Avolio on 2/18/2014

One benefit of owning a home is that come tax time, there are a variety of things you can claim deductions for. Whether you have someone prepare your taxes for you, or do them yourself, it is good to know all the types of deductions you can take to ensure you lower your taxes as much as possible. First things first, in order to take advantage of the deductions you will likely need to itemize, which is a bit more complicated than the EZ form you previously used. Whether you file a single or joint tax form, you get an automatic deduction for yourself. But when you itemize, you often make out better with a higher overall deduction. Each year, the various deductions change, so it's always good to keep your eye open around tax time for updates for the tax year. A quick Google search can give you some places to start. Even deductions that have been around for a long time can change on the specifics, so make sure you stay informed! Here are a few deductions that are standard:

  • Mortgage interest paid in the tax year,
  • Points you paid on your mortgage,
  • Property taxes paid including any that were prepaid and listed on the settlement sheet when you closed on your home,
  • Energy efficient improvements (there are only specific items that this can be used on and can vary year to year),
  • Medical expenses more than 7.5% of the adjusted gross income (this one is scheduled to increase to around 10% in 2013, making it harder to meet)
As mentioned earlier, deductions can change each year. In past years you were able to deduct energy efficient home improvements such as adding insulation, or there were incentives for being a first time home buyer. You never know what other deductions may pop up, so it's always worth saving receipts just in case!  




Categories: Money Saving Tips