Home Office Deduction Split Between Homes

This is for an article I'm writing. I can't find any guidance:

Consider a freelancer who is fully entitled to a home office deduction--he has a separate room in his New York house he uses exclusively for his work.

He owns a condo in Florida. It also has a home office. He spends all of January and February there, working.

How would that work? Could he claim 5/6 of the deduction for his NY house and 1/6 for his Florida house? Could each be considered a principal place of business for the time he is there? They are never simultaneously a principal place of business. Or would he just lose the deduction entirely? Or should he just do NY for 12 months since it is his "real" home?

Any insights appreciated!

Reply to
Richard
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If as you say you are entitled to the home office deduction for your NY home, then you must have already made the determination that your NY residence is your principal place of business. As such, that is the only home that can qualify for the business use deduction. In addition, you are only using that home for 10 months. You can only take a deduction for 10 months of use.

The above answer assumes that you do not meet the exception to the principal place of business rule. I.e., you are not meeting clients or customers whose use of any home is substantial and integral to the conduct of your business.

Reply to
Alan

So you can only have one principal place of business in any tax year? If I have a home office that is my principal place of business, but I move in July to another place and move my home office there as well, I get no deductions for five months?

Reply to
Stuart A. Bronstein

If you have homes in two locations both of which you are using for business, as stated in the OP, then the home that is the principal place of business in the year is the one that you can deduct. There is pretty good guidance on how to determine which of your homes is the principal place of business.

Reply to
Alan

I wasn't talking about two places of business at the same time. I'm talking about two places, each of which is the principal place of business, one for seven months during a year and the other for five months.

Are you saying that the place that is the principal place of businss for five months doesn't count because the other place was used more, and it can be the only one?

I haven't researched this issue, but I'd be very surprised if you can't claim a home office for a principal place of business only because it was your principal place of business for less than six months in a tax year.

Reply to
Stuart A. Bronstein

My answer was limited to the specific set of facts.

Not what I said as my answer was limited to the set of facts presented.

I haven't researched it either and by the way, time a home is used for business is only one factor. The Treasury has only issued proposed regs for Sec. 280A and I'm not going to check rulings or court cases.

The principal place of business rule only deals with business use of your home. The literature I have seen says that you can deduct business use of your home expense if the home is your principal place of business. A taxpayer can only have one principal place of business for a trade. If a taxpayer has more than one location that he is using for his trade, then you have to look at the facts to determine which one is the principal place. I would have no issue with taking 12 months of deductions for a taxpayer who only owns or rents one home that he uses as his principal place of business for 4 months and then moves to another home and moves his principal place of business to that home for

8 months. In this instance, the taxpayer never had another fixed location in the tax year where he could conduct substantial administrative or management activities. I would not feel comfortable without research, taking a deduction for 12 months on two or more homes owned or rented at the same time, as it is not clear to me that when you have two fixed locations both capable of being used for business you can say that at different points in time each one is the principal place.
Reply to
Alan

This sounds problematic for me. He needs to work out of this home for the full 12 months. For the 8 months he is not there it is not the principal place of business.

Common sense tells me that if you have two different Schedule C businesses then you can have different homes. Say you live in CA from January to June and do tax preparation out of your home, and in Florida from July to December doing surfing lessons out of your home on the beach. Each is a different business, so I think each gets a different tax home.

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