If you carry business or profession from a portion of your home, you are allowed home office tax deduction as also depreciation on the property. Please read Home Office Deduction Calculator. If you are using Form 8829, after calculating your deduction for the business use of your home (Part II), you can figure your depreciation deduction in Part III.
Table of Contents
Home office depreciation calculator
Method of computing depreciation used in the calculator
You need the following to compute the depreciation on home office
- Basis in the Home on the Date, you started using a portion of your home as Office. The basis usually include cost plus the cost of any improvements to the property.
- The Cost of the Land.. This has to be reduced from the basis
- The Date of start of Office
- The Percentage of homes used for business purposes-
- The Depreciation Factor (from the Instructions for Form 8829): 2.461%, which is given below for 2022 (it has been same since 2019)
Home office depreciation factor-2022
As you can see, the depreciation on the home office requires a declared factor that is given in the instruction for Form 8829 to figure the allowable expenses for business use of your home on Schedule C (Form 1040) and any carryover to 2023 of amounts not deductible in 2022.
| IF you first used your home for business in the following month in 2022… | THEN enter the following percentage on line 41 |
|---|---|
| January | 2.461 |
| February | 2.247% |
| March | 2.033% |
| April | 1.819% |
| May | 1.605% |
| June | 1.391% |
| July | 1.177% |
| August | 0.963% |
| September | 0.749% |
| October | 0.535% |
| November | 0.321% |
| December | 0.107% |
Example for depreciation computation
David started using a home office in May 2022. Other relevant data are :
- Basis in-house =$300,000.
- Land cost: $30,000.
- Improvements to property: $20,000
- Area of office: 120 square feet
- Area of the home is 1,200 square feet.
- % use of home for office = 120x 100/1200=10%
Adjusted basis of house = $270,000 ($300,000 – $30,000)
Depreciation Factor for the month of May= is 1.605% .
That means the total deprecation for the house for the year 2022 equals: $270,000 x 1.605% = $4333.5
David can claim a deduction on account of depreciation for his home office in 2022 would be: Total depreciation x % of business use, which comes to $4333.5 x 10% = $433.35
This amount is carried back to Part II of Form 8829 to complete the business use expense deduction.
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