USA New house/shop used for business

[coolbrze123]

1st post here... I own a tree service in VA & about 4 months ago purchased a new house w/ a large shop (3 bays) on it. I'm keeping my equipment (trucks, chippers, stump grinder, saws, gear, etc.) here. I also have an office / loft area in the house that I use for work. How do I go about writing this off on my taxes & what percentage of it can I write off? Thanks for any help, tips, &/or advice!

 

[Drmdcpa]

Any reasonable method. The most common are number of room vs business room or square feet for business vs total square feet.

Not all expenses will use the same allocation method. For example a business that uses a lot of electricity might allocate the total electric bill differently.

Also anything directly related to the business should be 100% business. For example if you have a dedicated phone line installed in the business use area.

Most, if not all, expenses should be allocated.

Alternatively and maybe more wisely incorporate the business and have it pay you rent for use of the land.

 

[coolbrze123]

So figure out sq. footage for the shop/office area vs. entire square footage of everything & write-off that percentage, correct? Also, can I write off that same percentage of all total expenses?

 

[Drmdcpa]

Reread my original response.

 

[Warren Scaman]

If you use part of your home for business, you may be able to deduct expenses for the business use of your home, but there are some rules. To qualify to deduct expenses for business use of your home, you must use part of your home:

• Exclusively and regularly as your principal place of business, or,
• Exclusively and regularly as a place where you meet or deal with patients, clients or customers in the normal course of your trade or business