Calculating home office space for taxpayer for home jointly owned with non-spouse

Forum|Forum|4 years ago
September 19, 2021
2 replies
26 views

Taxpayer jointly owns home w/ a non-spouse. Office space is used exclusively by taxpayer. For total area, should the remaining part of the home square footage be divided by 50% and then add the office space square footage? Dividing any utilities in 1/2 assuming that is how they paid.

Is there a better way to determine percentage of office space versus the one proposed above? They are an unmarried couple. Perhaps just treat it as you would for a married couple?

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BobKamman

Level 15

If the tax savings from all that work, compared to the tax savings from just using the simplified method, is more than the amount of your fees for pro-rating itemized deductions and recapturing depreciation when they sell -- you're probably doing something wrong.

joshuabarksatlcs

Level 9

Though echoing Bob, I'd assure you there's no need to count the time I spent reading and responding to this thread. I come to this forum only for kicks and drama.

I come here for kudos and IRonMaN's jokes.

BobKamman

Level 15

"Drama" is right. OIH is an emotional issue. A man's home is not only his castle, it's his tax loophole. Or at least he thinks of it that way. "You'll have to pry this complicated Schedule C computation from my cold, dead hands."

"Kicks" is right, too. It's fun to watch the practitioners who still think there is a little man with a green eyeshade at IRS, attaching red flags to every return that indicates an OIH deduction.

I admit, though, that the simplified method may result in substantially lower deductions in areas with higher costs to buy and maintain a home, than where I live. And Congress has discouraged its use by moving more people to standard deduction, so their mortgage interest and property taxes are worthless on Schedule A. (Nor does the SALT limit help.) My ideal OIH client would rent a small 2-BR in a place like NYC and pay $3,000 a month for it. 15% of square footage times rent, utilities, insurance and how about holiday tips to the doorman?

T

TaxGuyBill

Level 15

@linduca1216 wrote:

For total area, should the remaining part of the home square footage be divided by 50%

Assuming the taxpayer uses the entire home, you would use the square footage of the entire home.

As you mentioned, you enter the expenses that were actually paid by the taxpayer. You mentioned they paid 50% of the utilities, but that would apply to whatever percentage of the mortgage interest, real estate taxes, etc. that they pay for. And you likely would only enter 50% of the Basis for depreciation.

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