Home Office

Is a home office required to be well partitioned?

Can a taxpayer claim half of a room is exclusively used for his home office and the other half of the room is reserved to be a guest bedroom, with no partition in between?

Many taxpayers think this is the case but the room must solely be used for the business. I always ask the client if it looks like my office or a workshop (if they are a tradesperson) then it’s an office. Most people unfortunately say what your client said snout it being a dual purpose room.

Are usually then talked him off the ledge by mentioning how they’re already deducted property taxes and mortgage interest if they itemize. And then walk them through possible depreciation recapture when they sell the home. Most clients are sold on that.

280A(c)(1) refers to

portion of the dwelling unit

.
No partition necessary.

I agree with Howard. Regular and exclusive. 5x10 Desk and chair would work. Not important for the deduction but rather to change what would be commuting mileage to deductible mileage.

Cheating on the home office is rampant, always centering around "exclusive".

No partition is required but I was told in an IRS seminar one time years ago that if the IRS made a home visit and could see a TV from your desk, they'd void it. I seriously doubt that's still relevant but I know when a friend was audited, they asked about that sort of stuff.

Do they generally require an in-person visit if they're auditing a home office? Anyone dealt with that before? Curious what would happen if you move to a different place; would they accept staged photos?

The last time an IRS agent stopped at one of my client's homes was...................................

Do they generally require an in-person visit if they're auditing a home office? Anyone dealt with that before

Don't mind the mattresses and big screen TV leaned up against the wall in the living room....

Do they generally require an in-person visit if they're auditing a home office? Anyone dealt with that before

Don't mind the mattresses and big screen TV leaned up against the wall in the living room....

Haha, there is no need to look behind the curtain.

Just did a google search and this little bit came up:

The key point in taking the home office deduction is that the office space must not be for both personal and business use. If you want to deduct your home office, it cannot be the place you also pay your bills, email your friends, or watch TV.

Since the space must be used regularly for business, occasional or incidental business use does not qualify.

I'm guessing the IRS thinks if you can watch TV from the office, you are watching TV from the office. Reality is, I watch CNBC at my actual office via my laptop. I also remember them saying if you have computer games on your at-home work computer it isn't a work from home computer. I have computer games on my full time work computer.

Just want to mak sure I understand the consensus.

My impression is that only Gr8ful in post #2 thinks the whole room must be used exclusively for the home room.

But everyone else seems to think a room can be half and half between a home office and a guest bedroom, with no partition in between is required.

Is that right?

I have also heard the no TV thing. I have had TVs in actual offices and have one in my office, now. I almost never watch it but sometimes I need background noise or want to listen to news. I could do the same through my computer but I prefer to not utilize a screen for it. Or I could use my company iPad for the same purpose. You can bet if I ever have a visit, that TV is going to be a screen for my surveillance cameras used to help protect the assets and client documents in my home office and business.

Same with not paying bills out of a home office. I paid personal bills from every commercial office I have ever worked.

With that said, I have looked at the home offices used by some existing and former clients. Some clearly meet the exclusive use tests. Others do so through logical thought--a partition exists, it is not feasible to be used for any other purpose, but it is part of a larger room. Case in point is a 4x6' area between a laundry room and kitchen that was perfectly suited for a desk, computer, and printer, but could not possibly be used for any other purpose once those objects were in place. I felt they have met the exclusive use test and did not make an issue of it. Now, if it were a desk in a master bedroom or living room, I would likely object and say it does not qualify, especially if they have kids and it is the primary family PC.

So I guess I ultimately fall in the camp of believing a partition needs to exist. Is it accurate? Who knows, but it is my conclusion from my research on the matter and is also one of the best ways to do away with the "exclusive use" debate.

But everyone else seems to think a room can be half and half between a home office and a guest bedroom, with no partition in between is required.

How far can this be extended? For example, suppose one bedroom is partially used exclusively and on a regular basis as an office that is the taxpayer’s principal place of business. The closet has two filing cabinets that contain only business-related files, there are three bookcases with business-related books only, and there is one desk that is used just for business. There is also a desk that the taxpayer uses for personal activities such as paying bills, writing letters, balancing the checkbook, and two bookcases in the closet containing personal books.

280A(c)(1) requires “a portion of the dwelling unit” be “exclusively used on a regular basis” as the taxpayer’s principal place of business. The two filing cabinets with business-related files, three bookcases with business-related books, and one of the desks seem to satisfy these requirements. But they make up only about one-third of the total space in the bedroom. Does this qualify?

The last time an IRS agent stopped at one of my client's homes was...................................

2011

Do they generally require an in-person visit if they're auditing a home office? Anyone dealt with that before? Curious what would happen if you move to a different place; would they accept staged photos?

Don't know if they generally require it, but I've dealt with it.

Decades ago I remember a CPE instructor saying to take pictures. Don't recall if he actually had to use them in an audit or not but I do remember the suggestion being made.

Does this qualify?

Yes.

The last time an IRS agent stopped at one of my client's homes was...................................

2017. TP reported different figures for Marketplace Insurance than what he was reporting on return. Caused an audit, but audit was no change. Auditor wanted to see office in home.

Amazing. I must be living a clean life.

2017. TP reported different figures for Marketplace Insurance than what he was reporting on return. Caused an audit, but audit was no change. Auditor wanted to see office in home.

Did he meet him at the door in suit and tie, hair still damp from shower like his first job interview?