Case Study - Selling a Home Office
Bob Bruhaha sold his main home in 2014 at a $30,000 gain. He
meets the ownership and use tests to exclude the gain from his income.
However, he used part of the home as a business office in 2012 and
2013 and claimed $500 depreciation.
Because the business office
was part of his home (not separate from it), he does not have to allocate
the basis and amount realized between the business part of the property
and the part used as a home. In addition, he does not have to report
any part of the gain on Form 4797. However, he does have to report
the $500 he claimed as depreciation as income on Schedule D (Form
1040).
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