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Richard
Richard, Tax Attorney
Category: Tax
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Experience:  29 years of experience as a tax, real estate, and business attorney.
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I own a home with a basement rental apartment. What are the

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I own a home with a basement rental apartment. What are the tax implications if I stop using it as rental property and start using it for a home office?
Submitted: 2 years ago.
Category: Tax
Expert:  Richard replied 2 years ago.

Welcome! My goal is to do my very best to understand your situation and to provide a full and complete answer for you.

Good afternoon. The tax benefits are basically the same on the deduction side; on the revenue side, you obviously will now not have the rental income. You will now report the deductions on Schedule C rather than Schedule E, but the result is pretty much the same. You will continue to get to depreciate the portion of the house attributable to home office and get the same deductions related to that percentage of the home being used for your home office...taxes, utilities, insurance, mortgage interest, repairs, etc.



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Thanks for allowing me
to be of service to you. Please be aware that the information provided here is
not legal advice. Rather it is simply general information. All states have intricacies in their laws
and any information given is simply information only and specifically is not
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Customer: replied 2 years ago.
Thank you! The office would not be for 100% of my business, only about 30%. Do you think it would still be tax advantageous?
Expert:  Richard replied 2 years ago.

You're welcome. You must use the office regularly use part of your home exclusively for conducting business. So, if you use 30% of it for business, you could take 30% of the percentage for home office. But, if you only use the office as a whole 30% of the time, you would not be able to take a home office deduction for the office because it would not be used exclusively for business.

Customer: replied 2 years ago.
Is Mortgage Interest only deductible on Schedule C? Would it be deductible on Schedule E, and is it deductible on any other schedule?
Thank you.
Expert:  Richard replied 2 years ago.
No...you can deduct mortgage interest and property taxes on Schedule A if it's not rental or home office.
Richard, Tax Attorney
Category: Tax
Satisfied Customers: 45653
Experience: 29 years of experience as a tax, real estate, and business attorney.
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