Originally Posted by kemal943
I have elderly care business in my home and I have (SMLLC) Single member LLC for this business. Business use percentage is 85% personal 15%. Can I claim business use home deduction such as 85% of Mortgage interest ,property taxes, Utility, repair maintenance on my Schedule C Form.
.Correct; as you use space in your home on a regular basis for providing daycare, you may be able to claim a deduction for that part of your home even if you use the same space for nonbusiness purposes .as SMLLC owner as you know you need to file Sch C/SE; so on your Sch C,you can deduct biz related expenses;aslongas you are figuring your deduction using actual expenses and you regularly use part of your home for daycare, you need to figure what part is used for daycare. If you also use that part exclusively for daycare, deduct all the allocable expenses, subject to the deduction limit. If the use of part of your home as a daycare facility is regular, but not exclusive, you must figure the percentage of time that part of your home is used for daycare. A room that is available for use throughout each business day and that you regularly use in your business is considered to be used for daycare throughout each business day. You do not have to keep records to show the specific hours the area was used for business. You can use the area occasionally for personal reasons. However, a room you use only occasionally for business does not qualify for the deduction. If you used actual expenses to figure your deduction for business use of the home in a prior year and your deduction was limited, you cannot deduct the disallowed amount carried over from the prior year during a year you figure your deduction using the simplified method. Instead, you will continue to carry over the disallowed amount to the next year that you use actual expenses to figure your deduction.as you own your home and qualify to deduct expenses for its business use, you can claim a deduction for depreciation. Depreciation is an allowance for the wear and tear on the part of your home used for business. You cannot depreciate the cost or value of the land. You need to deprecaite/capitalize I mean a permanent improvement increasing the value of property, adds to its life, or gives it a new or different use over a certain period of time, I guess 39 years as biz home pty. Examples of improvements are replacing electric wiring or plumbing, adding a new roof or addition, paneling, or remodeling. You recover its cost when you sell or otherwise dispose of the property as ordinary income taxed at max 25% BUT IF YOU SELL IT AT a los then no need to recapture the unrecaptured depre of home. So, You must carefully distinguish between repairs and improvements
Also, You choose whether or not to figure your deduction using the simplified method each tax year. You can make the election for a home by using the simplified method to figure the deduction for the qualified business use of that home on a timely filed, original federal income tax return. An election for a tax year, once made, is irrevocable. A change from using the simplified method in one year to actual expenses in a succeeding tax year, or vice-versa, is not a change in method of accounting and does not require the consent of the Commissioner aslongas you elect to use the simplified method, you cannot deduct any actual expenses for the business except for business expenses that are not related to the use of the home. You also cannot deduct any depreciation including any additional first-year depreciation or section 179 expense for the portion of the home that is used for a qualified business use. The depreciation deduction allowable for that portion of the home is deemed to be zero for a year you use the simplified method. Although you cannot deduct any depreciation or section 179 expense for the portion of your home used for a qualified business use, you may still claim depreciation or the section 179 expense deduction on other assets used in the business (for example, furniture and equipment). To figure the amount you can deduct for qualified business use of your home using the simplified method,1. you need to Multiply the allowable area by $5 or less than $5 if the qualified business use is for a daycare that uses space in your home on a regular, but not exclusive, basis. 2. Also you need to subtract the expenses from the business that are not related to the use of the home from the gross income related to the business use of the home. If these expenses are greater than the gross income from the business use of the home, then you cannot take a deduction for this business use of the home. Then you should take the smaller of the amounts from 1 and 2. This is the amount you can deduct for this qualified business use of your home using the simplified method