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Daycare and Taxes All things related to Taxes and running a Daycare post here. Topics of tax exemptions, forms, filings, tax write offs, IRS etc.

 
 
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Old 04-02-2019, 09:41 PM
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vlouie574 vlouie574 is offline
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Join Date: Apr 2019
Location: Long Island, New York
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Default Home Improvement on Rented Home

First off, Tom's website http://tomcopelandblog.com has a plethora of information. I will be signing up for kidkare.com
and will gladly sign up for The Child Care Business Partnership membership.

So my wife and I rent a house with a full basement (1000sq ft main floor and 1000 sq ft basement) Last year we spent about $25k gutting and remodeling the basement. The whole basement is now dedicated to the daycare and is used as a play area with 2 napping rooms, feeding area and 1/2 bathroom.

Can I claim the remodeling costs as a business expense?

Can I use the Exclusive Use Rule for the basement? Other than the daycare we don't use it for anything else.

Which brings me to Time-Space Percentage question. The whole main floor is 100% shared use for the daycare as well. Currently on Form 8829 on Part 1 I have 2000 sq feet with 100% usage, 3870 hours out of 8760 hours which brings me to a Time Percent of 44.17%. But based on the Exclusive Use Rule formula from your blog:

Step One: Calculate the business use percentage of the exclusive use room:
1000 square feet divided by 2,000 square feet = 50%
Step Two: Calculate the T/S% of the rest of the home:
1000 square feet of regular use space divided by 2,000 square feet = 50% Space
50% Space x 44.17% Time = 22.08%
Step Three: Add the totals from Step One and Two together:
50% + 22.08% = 72.08% T/S%

Am I correct on this?
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