New Telecommuting Job, House Construction and Taxes

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
Post Reply
jb9
Posts: 133
Joined: Thu Feb 24, 2011 4:31 pm

New Telecommuting Job, House Construction and Taxes

Post by jb9 » Mon Jun 29, 2015 11:35 am

Hello,

This is a somewhat complex question. First of all, I have a new job which allows me to work anywhere (with an internet connection). Second of all, I have owned a small building lot in a place that I have been longing to live (for over 15 years). I now have the opportunity to move to this location and work from a home office. It is my plan to hopefully get a house project started next spring (2016). I may try to finance the construction myself and my questions are as follows:

--Are there any tax implications/advantages that can be leveraged since my new home will also be my work location? I am not self-employed.

--Are there potential write-offs related to the construction of the home since, as I understand it, one can deduct a portion of their mortgage if one has a home office.

--Should I re-evaluate how I finance the project in order to take advantage of a tax deduction that may not be available to someone who self-finances the construction of a primary home and office?

Thanks again and feel free to ask for additional information that I may have neglected to include.

harrychan
Posts: 1408
Joined: Sun Nov 14, 2010 9:37 pm
Location: Pasadena

Re: New Telecommuting Job, House Construction and Taxes

Post by harrychan » Mon Jun 29, 2015 12:07 pm

From my discussion with tax professionals, it is generally not worth it to try to save on taxes for a home office. You need to demonstrate that the space is exclusive to business related. It also increases the probability of an audit from the IRS. Also, there are complications when you decide to sell the property. Check with a CPA.
This is not legal or certified financial advice but you know that already.

pshonore
Posts: 6420
Joined: Sun Jun 28, 2009 2:21 pm

Re: New Telecommuting Job, House Construction and Taxes

Post by pshonore » Mon Jun 29, 2015 12:58 pm

jb9 wrote:
--Are there potential write-offs related to the construction of the home since, as I understand it, one can deduct a portion of their mortgage if one has a home office.

--Should I re-evaluate how I finance the project in order to take advantage of a tax deduction that may not be available to someone who self-finances the construction of a primary home and office?

Thanks again and feel free to ask for additional information that I may have neglected to include.
Generally mortgage interest and property taxes can be taken as an itemized deduction for a principal residence whether its used for business or not. A home office might allow you to claim a portion of the utilities, etc, provided the space is used regularly and exclusively for business.

mlipps
Posts: 892
Joined: Thu Jun 21, 2012 9:35 am

Re: New Telecommuting Job, House Construction and Taxes

Post by mlipps » Mon Jun 29, 2015 1:57 pm

If you are not self employed, you would deduct these items as "unreimbursed employee expenses" on the Schedule A. You can only deduct amounts which exceed 2% of your AGI. As others said, you can deduct the mortgage interest either way so no worries there. The tax benefit here is likely fairly minimal, so I probably wouldn't structure the loan differently because of it.

Post Reply