Home is owned 50%/50% between a child and parent. It is the child's primary residence and also the child takes a home office deduction. Is the unadjusted cost (for depreciation purposes) the total cost or just the child's?

Forum|Forum|6 years ago
May 26, 2020
15 replies
46 views

This is for the depreciation of the home office. The dad helped the child by investing in half of the property. This is all substantiated in the title. However, for the unadjusted cost should I put the child's 50% or the full cost? It is the child's primary residence as well.

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BobKamman

Level 15

Why would the kid be allowed to depreciate someone else’s property?

This reminds me of a story I read last night on CNBC, about the seven mistakes that parents make that destroy their kids’ mental strength. Check out (2) Always saving them from failure; (3) Overindulging your kids; and (5) Making sure they always feel comfortable

https://www.cnbc.com/2020/05/25/biggest-parenting-mistake-destroys-kids-mental-strength-says-therapist.html

G

Golfer2016Author

Level 5

I can't make any comment on that article haha, but it it is half owned by the child. I feel OK about depreciating the home office percentage of the full cost, because the business is a s-corp. So it is a reimbursement. In theory the child should give the dad his half of the reimbursement, but that's not what happens in this case.

T

TaxGuyBill

"Home is owned 50%/50% between a child and parent"

Point to ponder: Are you SURE about that?

This is definitely not my area of expertise, but from what I've read, depending on exactly how the title is held and the laws of the State, both may own 100% of the property.

G

Golfer2016Author

Level 5

I am sure it is owned 50/50. I looked at the title and they are both listed as joint. The transaction history is also clear because the dad put in cash.

What do you think about what I should use for the cost? 100% or 50%?

Another point is that the rules allow either of them to deduct property tax, for example. The child has been as it has been his primary residence

qbteachmt

Level 15

I see this as a Problem: "because the business is a s-corp."

You don't get to take Home Office deduction as an employee of an S Corp. You told us this is a personal residence, not a Corporate owned office. You told us you know what it states on the title. And you don't get to take this deduction, since the tax laws changed for TCJA 2017.

Employees are supposed to submit for reimbursement to the employer under An Accountable Plan for costs. Depreciation isn't going to be any part of this.

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