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Ignore home-office dedutcion myth

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in Small Business Tax

Q I’ve been advised by an accountant to pass up a  home-office deduction because of the audit risk.  Also, he says I would owe tax on the home office when I  sell my home. What do you think? G.P., Marietta, Ohio

A If you’re legitimately entitled to home-office deductions,  you should claim them. There’s no evidence that  this will increase your audit risk. But, it’s true that any  depreciation attributable to a home office after May 6,  1997, must be recaptured at a maximum federal income tax  rate of 25 percent. Tip: This recapture provision typically  isn’t as onerous as it first appears because you save taxes in  earlier years by deducting the depreciation.

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