Many Maine-based small business owners start out with an office in their homes. An important benefit to this is being able to deduct the expense of the office on the tax return. It’s key for home-based business owners to know that in order to receive the deduction, the space must be used regularly and exclusively as a place of business. Personal activities cannot be conducted there.
Once eligibility has been determined, business owners can deduct a proportionate share of home office related expenses including mortgage interest, depreciation deductions, utilities, insurance, security systems and repairs.
Also, the IRS has recently issued new regulations on home sales that provide an unexpected tax bonanza home-based companies. Now more of the $250,000 home sale gain exclusion ($500,000 for married couples filing jointly) can be pocketed.
Naturally, there are other restrictions. Records must be kept to prove the office is used for a home-based office.
Contact Filler & Associates to help determine eligibility for home office deductions. We can make sure the work space meets all the requirements under tax law.