Form 8829 - Home Office Deduction

[catax]

Do you have to move mortgage interest and property taxes to the form 8829 when depreciating a home office? Or is that an option? It doesn't benefit my client to claim those expenses on the 8829 and this is the businesses final year. I can't find this information in the instructions. So do you know if it is ok to depreciate the home office, claim utilities, and homeowners insurance and not the mortgage interest and property taxes as an indirect expense? Nena

[Pacun]

You take the whole thing (including depreciation) if you qualify or nothing. Are you sure your client meets the "regular and exclusive use" of the home office? If you client itemizes, it doesn't matter where you enter the mortgage interest (the taxable income would be the same), but the rule is that you have to prorate it.

[jainen]

>>the rule is that you have to prorate it<<

Form 8829 is designed to prevent you from getting excess deductions. You must take the prorated mortgage and taxes first; you can only claim other expenses if that doesn't use up all the net income. The other side of that is that you can claim the mortgage and taxes as a business expense even IF there isn't any income.

[catax]

Thank you both for your responses. Somewhere in the back of my mind I was thinking you had to take the mortgage intereest and taxes on the 8829, however, I wasn't sure. Thanks for clearing that up for me. Nena

[catax]

Thank you both for your responses. Somewhere in the back of my mind I was thinking you had to take the mortgage intereest and taxes on the 8829, however, I wasn't sure. Thanks for clearing that up for me. Nena