Rent as Tax write off?
- Thread starter highlife
- Start date
Help Support Arborist Forum:
Please keep in mind this response is from an arborist...not an accountant, so this is just what I have learned doing my own taxes, not an attempt at providing legal advise!
If you have space that is used exclusively for business. Home offices are a flag for auditors because so many people think they can write off a big part of their house and they use that room for a kid's play room, extra TV, and anything else you can think of. That is not exclusive use.
If you do have an exclusive office, what you do:
Measure the square footage of that office (let's just say 200 sf ft for the fun of it)
Measure the square footage of your hosue (let's just say 2000 sq ft for te fun of it)
Take that percentage (10% in my example), and divde that by your expenses (mortgage, taxes, insurance, lights, heat, etc...) and you can call that a business expense.
Better check with your homeowners' and business insurance to make sure they are both OK with that too (ie: if a fire starts in your office, HO probably won't cover it. Your business insurance may not cover a whole house replacement after HO denies claim...).
After all of that, I probably should tell you just read what the IRS has to say about it.
If you have space that is used exclusively for business. Home offices are a flag for auditors because so many people think they can write off a big part of their house and they use that room for a kid's play room, extra TV, and anything else you can think of. That is not exclusive use.
If you do have an exclusive office, what you do:
Measure the square footage of that office (let's just say 200 sf ft for the fun of it)
Measure the square footage of your hosue (let's just say 2000 sq ft for te fun of it)
Take that percentage (10% in my example), and divde that by your expenses (mortgage, taxes, insurance, lights, heat, etc...) and you can call that a business expense.
Better check with your homeowners' and business insurance to make sure they are both OK with that too (ie: if a fire starts in your office, HO probably won't cover it. Your business insurance may not cover a whole house replacement after HO denies claim...).
After all of that, I probably should tell you just read what the IRS has to say about it.
Livennine01
ArboristSite Lurker
As an accountant (don't ask me why I became one when I do manual labor as a hobby), why stop there? Why not include part of your electricity, internet, phone, etc.? If it is used as part of your business and is a genuine expense, yes you can deduct it. However, when you start getting into the specifics of special items, there are limitations -not the site to get into all the specifics. The IRS website is a great resource for accurate (but boring) information for legitimate business expenses. Just to add to what was already posted, but you may also find this link useful as well: Publication 334 (2012), Tax Guide for Small Business
