How to write off "Home Office/Showroom" Addition?

[Daniel Dietz]

Hello All,

I know there is a lot of talk about "The Home Office Tax Write Off". This is similar but different ;-)

I am planning on building an addition on my home that would be a great room on the main floor, and ALSO have a finished space in the walk out lower level for an office for both my rental business but MORE so an office/showroom for my 'day job' of construction/remodeling. I will be both doing office work for both businesses and ALSO meeting with clients, subcontractors etc...

I am wondering if these are both possibilities and which might be better, so IF I need to keep track of building costs that are specific to that area I know that going in and getting bids etc...

• 1) Use the 'square foot method' - this square footage will be approximately 17% of the overall area of the home. Can I take 17% of interest, taxes, utilities, maintenance etc... and use that? I think my total costs are about 18K per year.
  
• 2) Could I keep track of what THIS part of the addition project costs, and somehow write that off? I am estimating that this portion (compared to leaving it unfinished basement) will be about 40-50K.
  

Thanks, Dan Dietz

[Steven Hamilton II]

You would depreciate your costs using the applicable percentage of whole house items and then you will have depreciation for your actual costs. I think you're thinkin a bit more into it than you need to because you get both. 

Remember the area must be used "Regularly and Exclusively" for business.