If you use property in your home office that was used previously for personal purposes, you cannot take a section 179 deduction for the property. You can depreciate it, however. The method of depreciation you use depends on when you first used the property for personal purposes.
If you began using the property for personal purposes after 1986 and change it to business use in 2003, depreciate the property under MACRS.
The basis for depreciation of property changed from personal to business use is the lesser of the following.
The adjusted basis of the property on the date of change.
The fair market value of the property on the date of change.
If you began using the property for personal purposes after 1980 and before 1987 and change it to business use in 2003, you generally depreciate the property under the accelerated cost recovery system (ACRS). However, if the depreciation under ACRS is greater in the first year than the depreciation under MACRS, you must depreciate it under MACRS. For information on ACRS, see Publication 534, Depreciating Property Placed in Service Before 1987 (pdf).
If you began using the property for personal purposes before 1981 and change it to business use in 2003, depreciate the property by the straight line or declining balance method based on salvage value and useful life.
Business Furniture and Equipment
Listed Property
Property Bought for Business Use
Personal Property Converted to Business Use
Information courtesy of the Internal Revenue Service.
