An improvement, on the other hand, increases the value or the longevity of the property over what it had been originally. The basic definition of a repair is anything that puts the property back into the same condition it was in originally.įor example, if you paint the walls, fix a broken window, or change the locks on the doors, you are simply restoring it the way it was in the beginning. Some of these costs are repairs, and some are improvements. Maintaining a rental property includes fixing the building up over time.

The space must still be dedicated to the business activity as described above. For 2021 the prescribed rate is $5 per square foot with a maximum of 300 square feet. This new method uses a prescribed rate multiplied the allowable square footage used in the home. Calculate it both ways and use the percentage that gives you the largest deduction.īeginning with 2013 tax returns (filed in 2014), the IRS began a simplified option for claiming the deduction. Your business portion can be based on either the office's square footage divided by the square footage of the entire house or by how many rooms it encompasses versus the total number of rooms in the house. If you use a room or other dedicated space in your home exclusively for your rental activities, you can claim a portion of your house expenses as a deduction against your rental revenues. You have to record your income and expenses somewhere, and that is likely to be a desk or room in your home.

You may not consider your rental income to be a regular business with an office, but it is.

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