Home work area must be used exclusively for your business in order to be deductible.

Hello June,

Thanks for your business expense list.

My husband has a catering business run from home. Our house is his office, manufacturing place and also storage for the business. I remodeled the house to expand the kitchen and total cost is more than $ 200,000. How can I deduct the cost of the remodel?

Thanks.
yamin


Dear Yamin,

You cannot deduct any part of your home that is used for both business and living. The exception is any area used for storage/inventory. That area may be used for both and still be deductible.

Any capital improvements made to a home office or workshop are depreciated over 39 years. That means if you spend $39,000 renovating your home office you get to deduct $1,000 per year.

However, even though you cannot deduct the kitchen because it is used for both business and personal does not exclude your deducting equipment that is used either exclusively for your catering business or for both business and personal. For instance, a $4,000 refrigerator if used 80% for business is a $3,200 business equipment deduction.

If you work with your husband, and he is a sole proprietor then the most tax advantageous business structure is for you to be his employee. You might want to read these posts payroll -- spouse as employee .

Best,
June