Did You Miss Deducting Your Home Assessments?

Did you know that you can deduct the cost of home assessments for such things as a sidewalk, curb and sewer?

I didn't until this year. And I've been assisting family child care providers with record keeping and tax issues for over thirty years.

When you pay your property tax, look on your tax bill. It may include your share of the costs for work done by your city to install a new sidewalk, curb or sewer line to your home. You must subtract any such home assessments from your property tax before reporting your property tax expense on IRS Form 8829 Expenses for Business Use of Your Home.

But, you can deduct the business portion of house assessments on IRS Form 4562 Depreciation and Amortization. Because of the 100% bonus depreciation rule, you can deduct 100% of the business portion of these assessments as a land improvement on Form 4562, line 14.

Let's look at an example.

Robin Provider has a property tax bill of $6,000. Her Time-Space Percentage is 40%. $1,000 of her property tax is for a sidewalk assessment. Robin will report $5,000 on Form 8829, line 11b as property tax ($6,000 - $1,000). Robin will deduct $2,000 of this amount ($5,000 x 40% = $2,000) on this form.

Robin will put $400 ($1,000 x 40%) of her sidewalk assessment on Form 4562, line 14 when she elects to use the 100% bonus depreciation rule. Items that qualify include land improvements such as a fence, driveway, patio, sidewalks, curbs and sewers.

Note: The 100% bonus depreciation is expires January 2023. After that, the amount that can be deducted in subsequent years declines. See my Family Child Care Tax Workbook and Organizer for the current rule.

I'm glad I learned something new this year!

Image credit: https://extremehowto.com/sidewalk-repair-for-the-do-it-yourselfer/

For a comprehensive discussion of the 100% bonus depreciation rule, see my Family Child Care Tax Workbook and Organizer.