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Old 09-16-2008, 01:11 PM
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Is it mandatory for me to depreciate my home that is used as a home office?

Currently, I have an office in my home, and am wondering whether the IRS requires me to depreciate that part of the home used for my office. I really do not wish to depreciate my home as it will affect the basis when I sell my home, can I elect not to depreciate it?

Thanks for your help!



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Old 09-17-2008, 12:38 PM
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According to the IRS, if a taxpayer is qualified to deduct expenses for the business use of your home, "the taxpayer can claim depreciation for the part of your home that is a home office."

However, the IRS also states that "if the taxpayer does not claim depreciation on that part of your home that is a home office, the taxpayer is still required to reduce the basis of your home for the allowable depreciation of that part of your home that is a home office when reporting the sale of your home." This will result in higher potential capital gain in the future that may subject you to capital gains tax assuming your gain exceeds the allowable exemptions limits at that time.

In other words, whether or not you claim the depreciation on the part of the home that is used as an office or not, when you eventually sell your home, your basis is required to be reduced to the extent of the depreciation that you were allowed for all the years in which you used your home as an office!

In conclusion, it would be prudent to claim the depreciation as it will save you in your income tax liability!

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