Wednesday, April 21, 2010

10 Tax Breaks for the Home, Room by Room

There are a lot of tax breaks out there for home owners, but it can be difficult trying to figure out which you qualify for. AOL.com put together a new piece on tax breaks for the home, room-by-room, and interviewed me regarding home-related tax benefits for business owners. You can find a section of their article – including my quote – or head on RealEstate.AOL.com for the rest

If you primarily work from home, you should be able to deduct a percentage of your mortgage interest, real estate taxes, casualty losses, home repairs and maintenance, utilities, house insurance, security system and even garbage removal based on the square footage of your home office space compared to the overall square footage of your home.

"In order to qualify as a home office in the eyes of the IRS," says tax attorney Roni Deutch, CEO of the Roni Deutch Tax Center," you need to have a separate room or designated space that is used exclusively for business purposes. If it is not a room, then the space needs to be separated by a room divider of some sort. Additionally, the IRS is very strict about the exclusive use rule, so if your children play in the office or your spouse uses the room as a home gym then it will not qualify."

Use IRS Form 8829 if you are self-employed. Download Publication 587 for IRS rules. And if turned an old bedroom into an office space using California Closets or other remodeling project, you should be able to deduct that expense too for work, if you itemize.