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Old 01-12-2011, 06:23 PM
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TomCopeland TomCopeland is offline
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Join Date: Jun 2010
Location: St. Paul, Minnesota
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Default Mortgage interest

When you own a home you can claim the time-space percentage of your mortgage interest on Form 8829. You don't deduct your mortgage payment. But you should depreciate your home!!! An accountant who tells you not to depreciate your home is hurting you. Here's why:

Let's say you are entitled to claim $1,000 a year in home depreciation and you are in business for 6 years before you quit. 5 years later you sell your home. Over the 6 years you were in business you claimed $6,000 in depreciation. You will owe tax on this $6,000 when you sell your home. But if you didn't depreciate your home you will still owe tax on the $6,000! The IRS rules says that if you are entitled to claim depreciation on your home you will be treated as if you did depreciate your home! So, your tax accountant's advice is terrible because you can't avoid this tax later.

If you use the standard mileage rate you can also deduct parking expenses (for your business trips), tolls, as well as the business portion of car loan interest and car property tax. Not all states charge property tax when you renew your car registration. Look on your statement to see if there is a tax. Many providers and tax preparers miss these deductions. The business portion is arrived at by dividing your business miles by the total number of miles your car was driven.
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