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Clemmons, NC Office
3746 Clemmons Road.
P O Box 1396
Clemmons, NC 27012
336-766-6811
Mocksville, NC Office
151 South Main St.
Mocksville, NC 27028
336-753-1839
Littleton, CO Office
1767-A Denver West Blvd.
Golden, CO 80401
P O Box 620892
Littleton, CO 80162
303-913-3256 |
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| | | The Home Office Tax Trap
| | | | Sale of Your Personal, Principle Residence - The Home Office Tax Trap
Many of us take legitimate deductions for our home offices. For some, this may include a deduction for depreciation for the part of our home used as a home office.
But watch out! This may create a future tax liability.
When you sell your house, you may have to “recapture” any depreciation claimed for your home office. Any depreciation recaptured is taxed at a blanket 25% rate.
Example: Dick and Lizinka purchased their house in 2001. In 2005, their son, Campbell moved to Mississippi and his bedroom was converted into a home office. As part of their home office deduction, Dick and Lizinka deducted $250 in depreciation on their 2006, 2007, and 2008 tax returns. They sold their house in 2009. They must “recapture” this depreciation deduction of $750 on their 2009 tax return.
Their 2009 tax bill will include $187.50 for depreciation claimed for their home office.
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