If you own your home and qualify to deduct expenses for its business use, you can claim a deduction for depreciation. Depreciation is an allowance for the wear and tear on the part of your home used for business. You cannot depreciate the cost or value of the land. You recover its cost when you sell or otherwise dispose of the property.
Before you figure your depreciation deduction, you need to know the following information.
The month and year you started using your home for business.
The adjusted basis and fair market value of your home (excluding land) at the time you began using it for business.
The cost of any improvements before and after you began using the property for business.
The percentage of your home used for business. See Business Percentage.
Adjusted basis defined.
The adjusted basis of your home is generally its cost, plus the cost of any permanent
improvements you made to it, minus any casualty losses or depreciation deducted in
earlier tax years. For a discussion of adjusted basis, see
Publication 551 (pdf).
Permanent Improvements.
Adjusting for Depreciation Deducted in Earlier Years.
Figuring the Depreciation Deduction for the Current Year
Information courtesy of the Internal Revenue Service.
