Shed as home office

[jw-rogers]

Just making sure I’m thinking about this correctly. Taxpayer bought a shed through llc, it’s on a slab, has electricity, correct treatment is to depreciate over 39 years - it’s not permitted or a listed improvement for taxes - 39 years seems right but crazy long given nature of the asset.

anyone else have the same situation? How did you handle?

[TaxGuyBill · Accepted solution]

Assuming it is not easily removed, you have it correct.  There is nothing else to "handle".

[jw-rogers]

@TaxGuyBill this is what gets me, what if they move, they can take it. It’s not completely permanent and a 39-year value doesn’t match the likely economic use. Oye the she shed.

[rcooley25]

I have not had that situation but 39 years seems like way too long of a period to depreciate that type of building over.

[Accountant-Man]

When it collapses in less than 39 years, they can write off the balance.

[TaxGuyBill]

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if they move, they can take it. It’s not completely permanent

and a 39-year value doesn’t match the likely economic use.

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You know much more about what the structure than I do, but generally if it is on a slab and has electricity, that is fairly permanent.  As I said in my original comment, if it is not easily removable, it is 39 years. 

The Recovery Period for tax depreciation doesn't necessarily align with economic use.

[qbteachmt]

"has electricity"

"what if they move, they can take it."

Do you not typcially have these in your area? No one takes them when they move; they sell with the property. I've only ever seen one that the owner sold and got moved to be used as a child's playhouse, and it essentially had to be rebuilt after relocation. That's why no one takes them when they sell.

"39 years seems right but crazy long given nature of the asset."

Unless it was cheaply built to start with, it will last at least that long.