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Office in home if not home owner

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Level 4

Tax payer has a girlfriend who is buying a house and they are looking for a house with a room or structure that T.P. can use as his office.  He files single schedule C.  Would he be able to claim a home office deduction and what is the impact on the non-spouse girlfriend? - she is the only one on the mortgage.  Is there a simple way to handle this as a business transaction?

Thank you

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7 Replies 7
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Level 15

"Would he be able to claim a home office deduction"

What expenses would he have related to her house?


ex-AllStar
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Level 4

If he paid her rent for the use of a room for an office, could he deduct the rent as a business expense? She would then need to claim the income as rental income and set up a schedule E and depreciate the business use room in her home.  If he paid for utilities, etc.  could the amount be prorated on his schedule C? For example, if the total electricity and gas was $1,000 and he uses the room that is 10% of the total house, could he deduct $100 as long as he paid that amount to her?  I know that he would not get to prorate mortgage interest or property taxes, but could she on her schedule E?

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Level 15

Personally I wouldn't go there.

If they were married  and she owned the house, this wouldn't work.


ex-AllStar
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Level 4

I have a question if no office was even involved, how does it work if two people live together and share expenses but only one is on title?  Does the IRS expect the person on title to claim the money they receive from the other non owner as rental income?  I can't find anything definitive. Thank you

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Level 15

@LSTAX wrote:

If he paid her rent for the use of a room for an office, could he deduct the rent as a business expense? She would then need to claim the income as rental income and set up a schedule E and depreciate the business use room in her home.  If he paid for utilities, etc.  could the amount be prorated on his schedule C? For example, if the total electricity and gas was $1,000 and he uses the room that is 10% of the total house, could he deduct $100 as long as he paid that amount to her?  I know that he would not get to prorate mortgage interest or property taxes, but could she on her schedule E?


Sounds a lot like he didn't really incur any expense but let's see how we can "create" some expenses so that he can take some deductions on Sch C...

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Still an AllStar
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Level 10

I don't remember off-hand, can you use the simplified method if you don't own the property?  I only have one client that uses it, he owns the property but decided it wasn't worth the time it takes to add up all of the utility bills.  I can't blame him, his exclusive use is a desk in the corner so we're only claiming ~24 sq ft.

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Level 11

That's not a Schedule E activity.  She's not engaging in the activity for profit. Well, maybe, if she signs an "Affidavit of Sugar Daddy Relationship."  What he pays her goes on the line for other income.  Used to be, the expenses could be deducted on Schedule A, miscellaneous subject to 2%, but that's gone and doesn't come back for a few years (unless).