Home office depreciation deduction

Forum|Forum|6 years ago
March 3, 2020
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I have a small home-based project management business and have, for the last 7 years, claimed a home office deduction on my taxes for contractual work I do via a 1099-MISC. In 2019 we sold our house and need to report that sale on our taxes. The TurboTax Home & Business software is asking me to list "home office depreciation deductions taken on this home" to adjust the cost basis for the home sale. I'm not certain where on my printed previous years' tax forms I can find that deducted amount and/or if I claimed it. Is there a specific line, on a specific form, that would have that amount for each year's tax return?

GiseleD

It depends on what method you used. There's two ways to claim the home office deduction. You can take a deduction for the percentage of the actual expenses that pertain to the home office (the regular method), or you can use the simplified method. If you used the simplified method, you took no depreciation. Below is some more information about the simplified method per Rev. Proc. 2013-13 (PDF):

Taxpayers can elect to calculate the deduction for using a home office for business under the simplified method rather than deduct actual expenses.
The simplified method is calculated by multiplying $5 by the square footage of the area in the home used for business.
The maximum area allowed under the simplified method is 300 square feet.
The simplified method simplifies recordkeeping and substantiation rules. Taxpayers do not have to separately keep track of the actual cost of utilities, maintenance, repairs, depreciation, etc.
When the home is sold, depreciation recapture does not apply for the period of time the simplified method was used.

If you don't know off the top of your head which method you used, you can check by reviewing your Schedule C forms. The line numbers may have changed over the years, but you will be looking for Expenses for Business Use of Your Home (line 30 in 2019). This line will tell you if you took the simplified method or the regular method.

So let's say you took the simplified method in 2019. Easy--no depreciation was taken for the home office, and you will indicate this accordingly in the software.

However, if you find that you used the regular method, the next thing to do is look for Form 8829 (Expenses for Business Use of Your Home). The line numbers may have changed over the years, but you will be looking for Depreciation allowable (line 42 in 2019). Once you get that number for each year, add it up, and that will be the amount of depreciation deductions you took.

Now, if you discover that you used the regular method but neglected to take depreciation in any year, please reply back with details. That is a special situation that requires a very specific approach.

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thegriffingangAuthor

Can't thank you enough for your response - it really helped! I know for each year I've always done the regular method. I have the amounts of depreciation allowed for each year (Line 42 or thereabouts), from each Form 8829. BUT I don't know how to tell if I actually took the depreciation each year. Can you advise where that would be?

Again, many thanks!