My wife runs a business out of our home and has a legitimate home office that qualifies for deduction. I’ve been told that there are some drawbacks to doings so. I know that it’s an audit flag. Not too worried there. But I’ve also been told that it can cost us more when we sell the house. Is there truth to that? Can you explain it in layman’s terms? Is it worth claiming? THANKS!
Thanks for the answers so far. So is it worth it to take this deduction? Am I going to lose everything I saved when I sell?
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You would be subject to some strict documentation rules. You would have to depreciate the part of the house that is an office and the depreciation would come back as taxable income not excludable as part of the home sale when you sell.
If this is rented home, then no problem.
If you own the home, then for the home office you must take depreciation. When you sell the home, this depreciation is treated as income.