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03/03/2011

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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!

Michelle

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.

Jess

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?

tom

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.

Kerry

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?

tom

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

Danielle

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?

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