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Client upgraded home's electrical panel for home business, is all it depreciated to home business?

Level 2

Client's business is breeding snakes.  It's all done at her home in a large room and shed in her backyard.  She was having electrical problems as her business has grown quite a lot.  She had to replace her electrical panel to accommodate the extra electrical load caused by her business.  Is this electrical work 100% deductible;  I'm inclined to say yes because she wouldn't have done this work if it wasn't for the business.  Also, if it's a yes, does it get depreciated under 27.5 because it's a residential house?  Just doesn't seem right to have such a long write off for a business related ungrade.

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4 Replies 4
Level 15

Snakes?  I hate snakes.  That's one client I would never make a business visit to.

It's a business so it isn't residential property.  They question is, how many dollars are involved which would determine whether or not you could write the whole thing off as an expense.

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Level 7

The 27.5 class life is used when the business use of the home is to rent it to someone to use as a residence

When a taxpayer uses a portion of their home for their Schedule C or F business, that portion is considered nonresidential real property and must use the 39 year life.

Electrical systems are considered a structure of the building unit and it sounds like the work was done to upgrade the entire house's electrical capacity.


Level 14

The panel was just fine, for the snakes.  The upgrade was needed for the rest of the house.  

Are these pets, or are they food for pet vultures?  Is she filing a Schedule F?  Are there different rules for farmers?  

Anyone know how "de minimis" rules apply to home office improvements?  

Level 5

Multiply the cost of the improvement by the business-use percentage and depreciate the result over the recovery period, which is 39 years for nonresidential real property.