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emc011075
emc011075, Tax adviser
Category: Tax
Satisfied Customers: 2759
Experience:  IRS licensed Enrolled Agent and tax instructor
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My wife and I are starting a home based cooking business and

Customer Question

My wife and I are starting a home based cooking business and in order to be successful we will need to make some improvements in our Kitchen so my wife can be more efficient and productive in her cake making. My question is will we be able to deduct the
cost of these improvements from our taxes?
Submitted: 1 year ago.
Category: Tax
Expert:  emc011075 replied 1 year ago.
Hi. My name is ***** ***** I will be happy to help you.
You would not be able to deduct the improvements in one year, you would have to depreciate it over 39 year and only if the kitchen will be used "exclusively" for the business. To qualify for business use of home tax deduction, part of the home has to be used "regularly" and "exclusively" for the business activity. That's IRS rule.
You can read more about it here: http://www.irs.gov/taxtopics/tc509.html
I am sorry if that's not the answer you were hopping for.
I see you offline now. So if this answered your question, please take a moment to rate my response so that I may receive credit for assisting you today. However, if you need clarification, or want to discuss this issue further, let me know. Thank you.
Customer: replied 1 year ago.
So if we also cook family meals in the same kitchen then we would not be able to deduct any of the cost of improvements?
Expert:  emc011075 replied 1 year ago.
That's correct. If you use the kitchen to cook family meals, you would not meet the exclusivity test and the improvements would be considered personal, therefore not deductible. Those improvements will be added to the basis of your home and you will be able to deduct them when you sale your home.
If you build a separate kitchen that will be used for business only, than you would be able to deduct percentage of utilities, mortgage interest, property taxes and other expenses associated with running your home, plus you would be able to depreciate the kitchen over period of time.