Paying taxes on home office depreciation... closing a home office (formerly self employed)

I stopped using my home office for business on 3/06; I depreciated the home office portion of my house for about four years. I have not sold my home, but I am no longer self employed, so it looks like I must report the total depreciation of the home office space on Form 4797 as a Section 1250 gain and pay capital gains for the total depreciation (reported on Schedule D) for the 2006 tax year. If this is correct, I assume I use the date I stopped using the home office as the date sold (Form 4797 line 19) and I can leave the gross sales price (line 20) and cost/other basis/expenses of sale (line 21) both blank. I certainly appreciate any assistance I can get...thanks. Mark

> > > > > > > > >
Reply to
icbmmark
Loading thread data ...

Nope. There's no sale of the home, so no gain to report for the home office. I'd be concerned about your furniture, fixtures, computers, etc where you took Section 179 expense over depreciation, as a change in use (from 100% business to 0% business use) would trigger a recapture of the excess Section 179 expense over regular depreciation.

-- Paul Thomas, CPA snipped-for-privacy@bellsouth.net

Reply to
Paul Thomas, CPA

Thanks! I knew it didn't pass the common sense test, but the tax software was giving me an error for not reporting the home office on the 4797. I've got a handle on the 179 depreciation. I appreciate your assistance. Mark

Reply to
icbmmark

When he eventually sells (say, in 3 years) is there any tax treatment for the depreciation, or does it get forgotten? Seth

Reply to
Seth Breidbart

When you sell the home, there will be a tax to pay on the home office depreciated part. It is not part of the $250,000/$500,000 exemption. State & local income taxes may also apply at the time of the sale. ___________________________________

-----> real address on hobokeni or hobokenx

Reply to
Benjamin Yazersky CPA

BeanSmart website is not affiliated with any of the manufacturers or service providers discussed here. All logos and trade names are the property of their respective owners.