« Join Tom Copeland at the National Family Child Care Conference | Main | When Trying to Save $8.25 a Month is a Mistake »



Feed You can follow this conversation by subscribing to the comment feed for this post.

Aimee Shaffer

If I depreciate my home and then stop doing childcare after 5 years, so I have only depreciated for 5 years instead of 39, do I just stop taking the depreciation when I stop my business? Or do I have to continue to take the depreciation for 39 years?

Aimee Shaffer

And what about depreciation recapture? It's all so confusing that it's very tempting to not even bother. Especially considering the small amount of money I bring in from childcare.

Tom Copeland

You stop claiming depreciation on your home when you go out of business. So if you were in business for 5 years, you'll only get 5 years of depreciation.

When you sell your home you'll have to pay tax on this depreciation, whether or not you claim it, so claim it!


Where do you list depreciation of your home? Only on form 8829? or do you also list it on form 4562?

Tom Copeland

In the first year you use your home for your business, list your home on Form 4562 and on Form 8829 (deduct it on Form 8829). After the first year, show house depreciation on Form 8829.

Alison Evangelista

Do you pay taxes on all deductions or just the business use of home deduction?

Tom Copeland

You don't pay taxes on your deductions. You pay taxes on the profit of your business. Your profit is determined by subtracting all your deductions (including business use of home deductions on Form 8829) from your income.


What happens if my Time-Space percentage changes from year to year? Do I recalculate the depreciation each year or am I locked into my first year?


When your time-space % changes it will affect your depreciation deduction. When you time-space % goes down, your depreciation deduction will go down and visa versa.


What if the home is used for childcare more than 39 years? Since the home still has "basis" can I still depreciate it for more years? Or do I have to stop depreciating after 39 years no matter what?


Once the 39 years is up, you can't claim any more depreciation on your home.


Why would they still tax you when you don't claim the depreciation ? Our accountant says we don't have to claim the depreciation on house and if we choose not to, we wouldn't be taxed. I was going to print off this page for him to see, but they would be able to see we didn't claim it. I just started in 2013, and we do plan on selling our house this next year or early 2015. I don't see point?

Michelle Carson

I am confused on deprecation recapture. I moved into my new home in June 2012. But I didn't sell my old home until June 2014. How do file the depreciation recapture specifically ? Do I even have to?

Michelle Carson

Danielle, I found this page helpful http://www.nolo.com/legal-encyclopedia/taxes-when-you-sell-house-containing-home-office.html

Also you dont have to claim depreciation of your home (which gives you a tax deduction, less taxes you have to pay) but when you sell your home you have to pay back a % of that deduction you took whether you took the deduction or not apparently.

For example my yearly depreciation of my home was around $150. So for total 6 years I deducted or saved $900 on my taxes. You have to claim deprecation recapture on sale of your home which is 25% of $900 so I have to pay back $225.

Is this Correct Tom???

Sara Howard

Tom, I live in my other half's home. We are not married. The deed is in his name. How do I claim depreciation and improvements? Am I even entitled to this deduction?


Since you aren't married and don't have your name on the deed, you can't claim depreciation or property tax or mortgage interest on the home. If you are married you can claim these deductions, even if your name isn't on the deed. If you pay part of the utilities, repairs, or home improvements, you can claim these expenses.
Time to get married! :)


Does depreciating (or not) affect a rental/ business space either way so you can't take full tax free personal residence gain (on sale of home of you have to do that immediately after buisness closes (or renters move out)?


Whether it's a rental home or private home, you will owe tax on the depreciation you claim, or are entitled to claim, when you sell it. You can avoid paying tax on the profit on the sale of the home if you live in it and own it for 2 of the last 5 years before you sell it and the profit is less than $250,000 (single) or $500,000 (married).

Verify your Comment

Previewing your Comment

This is only a preview. Your comment has not yet been posted.

Your comment could not be posted. Error type:
Your comment has been saved. Comments are moderated and will not appear until approved by the author. Post another comment

The letters and numbers you entered did not match the image. Please try again.

As a final step before posting your comment, enter the letters and numbers you see in the image below. This prevents automated programs from posting comments.

Having trouble reading this image? View an alternate.


Post a comment

Comments are moderated, and will not appear until the author has approved them.

Your Information

(Name and email address are required. Email address will not be displayed with the comment.)

Top Blog

  • Direct Capital Top Money Management Blog


  • Email Subscription

    Enter your email address:

    Delivered by FeedBurner


Become a Fan