Home-Office Tax Deductions Toughened

Posted on July 23rd, 2019 at 9:37 AM
Home-Office Tax Deductions Toughened

From the Desk of Jim Eccleston at Eccleston Law LLC:

The Tax Cuts and Jobs Act makes it more difficult for high-net-worth clients to deduct expenses for their home offices. A self-employed individual still is able to deduct certain home-office expenses. However, an employee that designates a portion of his or her residence to a home-office will not be able to deduct the same expenses. If a person uses the space as his or her primary place of business to meet with customers or clients, then that person can deduct direct expenses for the home office as well as a proportionate share of other expenses such as mortgage interest, property taxes, and utilities.

The deduction has limitations. For example, there may be limits as to whether an entire room can be deducted. And ancillary features, like a swimming pool, cannot be deducted.

Additionally, the deduction once again can cause issues when the home eventually is sold. Home-office deductions could add a post-sale tax in the form of recapture tax on depreciation, which, depending on total income, could reach as high as 25%. Many professionals recommend completing a cost-benefit analysis to decide if attempting to qualify for the deduction generates more savings than the additional recapture tax that will be incurred when the home is sold.

The attorneys of Eccleston Law LLC represent investors and advisors nationwide in securities and employment matters. The securities lawyers at Eccleston Law also practice a variety of other areas of practice for financial investors and advisors including Securities FraudCompliance ProtectionBreach of Fiduciary DutyFINRA Matters, and much more. Our attorneys draw on a combined experience of nearly 65 years in delivering the highest quality legal services. If you are in need of legal services, contact us to schedule a one-on-one consultation today.

Related Attorneys: James J. Eccleston

Tags: james eccleston, eccleston law, eccleston law llc, eccleston, tax cuts, jobs act, tax deductions, home-office

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