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DanielleCPA, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 789
Experience:  Years of Experience in Business & Personal Taxes
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I work from home full time for the benefit of my employer.

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I work from home full time for the benefit of my employer. I have not taken the home office deduction in the past as I lived in a studio apartment without a separate office space. I am purchasing a new condo, and considering using one of the rooms as an exclusive home office or for another purpose such as a dining room or guest room.

The square feet of the room accounts for 10% of the total unit.
I assume there would be no point in taking the deduction in the first year, since I would have only lived in the unit for 1.5 months.
I plan on purchasing $2,000 worth of office furniture (Can delay this to January 1, 2013)

Approximately what kind of tax benefit would I see by using this room as an exclusive office based on my financial information?

AGI: 140,000 /year
Mortgage Interest: 20,000 /year
Taxes: 8,000 /year
Utilities (gas&electric): 600 /year
HOA: 3600 / year ($800 water&sewer, garbage $308, $80 gas&electric, $520 maintenance, $890 insurance, $1002 Reserves for roof/painting)
Depreciation: ?
Unreimbursed Office Supplies < 200 /year
Welcome and thanks for your question!

Approximately how much is the condo you are purchasing? I need to know the cost to calculate the depreciation deduction?

Customer: replied 4 years ago.


Thank you.

Here is my calculation for your home office deduction:
Mortgage Interest - $20,000
Taxes - $8,000
Utilities - $600
HOA Assessments - $2,600 (I didn't include the $1,000 reserves since that doesn't relate to the home office at all)
Depreciation - $24,400
Total Home Office Expenses - $55,600
10% - $5,560 deduction

Since this will fall into the unreimbursed employee business expenses category, you are only allowed to deduct the portion of your expenses that exceed 2% of your AGI.

2% of 140,000 = 2,800

So the deductible portion of your home office is $2,760. The total deduction would include the $200 office supplies for a total deduction of $2,960.

Assuming Bush Era tax cuts expire, you will most likely fall into the 31% tax bracket in 2013. So the total tax savings to you for home office deduction will be $918.

Please let me know if you need any additional clarification and I will gladly assist you. If this satisfactorily answers your question, please give the answer a positive rating. Thanks and have a great day!
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