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How do I depreciate solar panels for office in home?

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Level 2
Taxpayers have a home office and installed a solar energy system for $15,342.  Their credit is $4,630.  What amount is depreciated?  What is the method?  Thank you.
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Level 8

This is actually a very nuanced question.  There is considerable disagreement about how home improvements are depreciated after a home office is established that are not directly related to the home office.  For example, consider the situation where you remodeled your kitchen after establishing your home office.  Can you justify any portion of the kitchen remodel as business related?


Specifically for solar panels, how much of the homes electricity expense is consumed by the home office? is it proportional to square footage?  Maybee


I have a client who raises snakes in his garage, we carefully track his electric consumption because his garage is about 2/3rds of his total home consumption - and I deduct that amount.


For solar, I would say that zero is conservative and percent of home is reasonable.  Unless the business is specifically energy intensive.

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Highlighted
Level 8

This is actually a very nuanced question.  There is considerable disagreement about how home improvements are depreciated after a home office is established that are not directly related to the home office.  For example, consider the situation where you remodeled your kitchen after establishing your home office.  Can you justify any portion of the kitchen remodel as business related?


Specifically for solar panels, how much of the homes electricity expense is consumed by the home office? is it proportional to square footage?  Maybee


I have a client who raises snakes in his garage, we carefully track his electric consumption because his garage is about 2/3rds of his total home consumption - and I deduct that amount.


For solar, I would say that zero is conservative and percent of home is reasonable.  Unless the business is specifically energy intensive.

View solution in original post

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