Home Office Deduction - Repair vs Improvement

[jpdx]

Wow, talk about confusing! When taking the home office deduction, a homeowner must expense repairs and maintenance, and depreciate permanent improvements. Sometimes it's difficult to determine which is which. How would you classify these costs:

+ Refinishing a wood floor that was covered in paint, two rooms, $1300
+ Decommissioning an old oil tank, $425
+ Remove knob+tube wiring, re-feed wires, and replace outlets on main floor, $2000
+ Install GFCI outlets needed by code, $300

[sokoloff]

Wow, talk about confusing! When taking the home office deduction, a homeowner must expense repairs and maintenance, and depreciate permanent improvements. Sometimes it's difficult to determine which is which. How would you classify these costs:

+ Refinishing a wood floor that was covered in paint, two rooms, $1300
+ Decommissioning an old oil tank, $425
+ Remove knob+tube wiring, re-feed wires, and replace outlets on main floor, $2000
+ Install GFCI outlets needed by code, $300

If none of those were directly related to the portion of the home used regularly and exclusively for the home office, I'd treat them all as personal expenses.

After that caveat, I'd treat all of the above as expense items and not amortize them. #2 and #3 are not permanent improvements (IMO). #4 is too small to bother capitalizing. Leaves only #1 as the questionable item, and I'd think it was more along the lines of maintenance than improvement as well. (None of those made the property substantially better, adapted it to a new use, or repaired it to a working condition. At most, they moved it from one working condition to another working condition, again with #1 being debatable.)

[jpdx]

If none of those were directly related to the portion of the home used regularly and exclusively for the home office, I'd treat them all as personal expenses.

Good point. I will re-evaluate whether they meet that criteria.

+I will exclude the wood floor job, because it was just the bedrooms.
+The oil tank is directly related to replacing an old furnace. So should that cost be capitalized since the cost of the new furnace surely will be?
+The electrical work, I can make the case, is related to the entire home. It was a partial re-wire of the entire home, and this makes me lean towards capitalizing (even though I rather not).