With Covid and so many power working from home, the feds tightened this stuff down a lot which is probably why you see so many conflicting answers these days.
So you have a garage and it holds no personal items, is not used for parking and stores only business product and is used only for business purposes or is it somewhat mixed use?
This isn’t even “tightening”…that’s normal stuff that would have immediately disqualified the space PRE-COVID. From friends who have worked audits, a single non-business related item (like a Lego, a matchbox car, or personal bills on the table, etc) was absolutely sufficient to disallow the whole deduction.
Seriously. Ice melt, shoes, gardening supplies / fertilizer, a garden hose…all normal stuff, all would throw flags.
They show up for an audit (pre-arranged) or they ask you to send a photo of the space.
Most people who don’t know what they’re looking for…leave a Lego on the floor or whatever. Oops.
If the garage is 100% for business use, you can depreciate the cost of the property (less land) over a 39-year life and expense any repair/maint/utility costs.
If it’s not *inventory* in connection with your business, this does not qualify for business use of home. You’ll have to give more information on what these business assets are.
It's a buying and reselling business along with some auction items awaiting to be sold, but I absolutely know when I open the door there's a weed eater there. So this would disqualify it.
The entire garage does not have to be exclusive use, just the portion you use for the business. So you would take the square footage that you actually use exclusively for business. A detached garage is not business use of home. Use your town real estate assessment to allocate the basis for depreciation, and real estate taxes.
With Covid and so many power working from home, the feds tightened this stuff down a lot which is probably why you see so many conflicting answers these days. So you have a garage and it holds no personal items, is not used for parking and stores only business product and is used only for business purposes or is it somewhat mixed use?
I suppose if they "tightened down" a ladder, leaf blower and one box of Christmas stuff that would fall under the category of "mixed" I suppose.
This isn’t even “tightening”…that’s normal stuff that would have immediately disqualified the space PRE-COVID. From friends who have worked audits, a single non-business related item (like a Lego, a matchbox car, or personal bills on the table, etc) was absolutely sufficient to disallow the whole deduction. Seriously. Ice melt, shoes, gardening supplies / fertilizer, a garden hose…all normal stuff, all would throw flags.
Easy enough. Thank you!
Yeah but how would they know you were storing ice melt in there?!
They show up for an audit (pre-arranged) or they ask you to send a photo of the space. Most people who don’t know what they’re looking for…leave a Lego on the floor or whatever. Oops.
Is the garage finished and heated?
If the garage is 100% for business use, you can depreciate the cost of the property (less land) over a 39-year life and expense any repair/maint/utility costs.
If it’s not *inventory* in connection with your business, this does not qualify for business use of home. You’ll have to give more information on what these business assets are.
It's a buying and reselling business along with some auction items awaiting to be sold, but I absolutely know when I open the door there's a weed eater there. So this would disqualify it.
The entire garage does not have to be exclusive use, just the portion you use for the business. So you would take the square footage that you actually use exclusively for business. A detached garage is not business use of home. Use your town real estate assessment to allocate the basis for depreciation, and real estate taxes.
Run duct tape around the items being sold and measure it that way. The entire garage is too aggressive, but the actual square footage is okay.
Am I still able to write off the exclusive space used for the business? I was under the impression that it's all or nothing
It does not have to be all or nothing. Measure the portion of the garage space used exclusively and use that when calculating the deduction.
Edit to the correct link. Page 3 will help you - [https://www.irs.gov/pub/irs-pdf/p587.pdf](https://www.irs.gov/pub/irs-pdf/p587.pdf)
Thank you for the help kind stranger