![]() If the home is rented, the rent expense replaces the interest, taxes, and depreciation. Once the percentage is determined, all the home expenses, including interest, real property taxes, home insurance, maintenance, utilities, and depreciation, are summed up and multiplied by the percentage to determine the deduction for the business use of the home. ![]() Edna’s percentage use of her home for business is determined as follows: The exclusive use requirement doesn’t apply. The home is 2,400 square feet, and the living room, kitchen and bathroom are a combined 1,400 square feet. When calculating the percentage of business use of the home, both the space used to operate the daycare business and the amount of time that the space is used to provide day care, including preparation and cleaning time, are factors.Įxample – Edna uses her living room, kitchen, and bathroom ten hours a day, five days a week to provide licensed daycare services. The services must be provided for individuals aged 65 or older, children, or individuals who are physically or mentally incapable of caring for themselves. However, the exception does apply if the services are primarily custodial and if the educational, development, or enrichment activities are only incidental to the custodial services. The daycare facility exception does not apply if the services performed are primarily educational or instructional in nature (e.g., musical instruction).
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