Can you claim home office deduction for 2019 as an investor ?

Tax, SDIRAs & Cost Segregation
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Can you claim home office deduction for 2019 as an investor ?

Oleksandr IvanovskiyPro Member
Rental Property Investor · Member since 2019 · 124 posts · 38 votes

Spoke with my tax adviser. I was told that I can’t claim home office deduction as an investor.

She mentioned that I can only do it if I were a realtor.

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Natalie KolodijBusiness Member
Moderator
Tax Strategist| National Tax Educator| Accepting New Clients · Member since 2014 · 3k+ posts · 4k+ votes
6y

Your tax adviser isn't familiar enough with how real estate overlaps with IRC 162.

Ask her if you also qualify for the 199A deduction. 

If your rentals rise to the level of a trade or business per IRC 162 (which, most do) you qualify for both. 

Also home offices haven't been a red flag in quite a while since now so many people work remotely.

AND

Having a home office increases the qualifying deductible miles you have substantially since it converts drive time from home to REI related things from non-deductible commuting to deductible miles.

And THIS is why you hire a tax pro who is specialized in REI, and don't rely on any general information on the internet.

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  • Jacob Sampson
    Investor · Topeka, KS · Member since 2015 · 1k+ posts · 1k+ votes
    6y

    I think right-offs like home office can be a red flag to the IRS and so I would recommend not, even if you can.  The tiny amount of money you are talking about is not worth getting on their radar.  There are other expenses you can claim like phone and internet that are less red flagish. 

    0Reply
  • Natalie KolodijBusiness Member
    Moderator
    Tax Strategist| National Tax Educator| Accepting New Clients · Member since 2014 · 3k+ posts · 4k+ votes
    6y

    Your tax adviser isn't familiar enough with how real estate overlaps with IRC 162.

    Ask her if you also qualify for the 199A deduction. 

    If your rentals rise to the level of a trade or business per IRC 162 (which, most do) you qualify for both. 

    Also home offices haven't been a red flag in quite a while since now so many people work remotely.

    AND

    Having a home office increases the qualifying deductible miles you have substantially since it converts drive time from home to REI related things from non-deductible commuting to deductible miles.

    And THIS is why you hire a tax pro who is specialized in REI, and don't rely on any general information on the internet.

    Podcast Guest on Show Pay Less Tax to the IRS This Year With THESE Real Estate Tax Strategies
    Kolodij Tax & Consulting
    WebsiteView Page
    7Reply
  • Ashish AcharyaBusiness Member
    CPA, CFP®, PFS · Sarasota, FL · Member since 2017 · 5k+ posts · 3k+ votes
    6y
    Originally posted by @Natalie Kolodij:

    Your tax adviser isn't familiar enough with how real estate overlaps with IRC 162.

    Ask her if you also qualify for the 199A deduction. 

    If your rentals rise to the level of a trade or business per IRC 162 (which, most do) you qualify for both. 

    Also home offices haven't been a red flag in quite a while since now so many people work remotely.

    AND

    Having a home office increases the qualifying deductible miles you have substantially since it converts drive time from home to REI related things from non-deductible commuting to deductible miles.

    And THIS is why you hire a tax pro who is specialized in REI, and don't rely on any general information on the internet.

    Love it ... 

    [email protected]941-914-7779
    INVESTOR FRIENDLY CPA®4.9242 Reviews
    WebsiteView Page
    TaxMD® | Tax Planning Software
    WebsiteView Page
    1Reply
  • Ryan Proffit
    Saint Joseph, MO · Member since 2018 · 401 posts · 244 votes
    6y
    Originally posted by @Oleksandr Ivanovskiy:

    Spoke with my tax adviser. I was told that I can’t claim home office deduction as an investor.

    She mentioned that I can only do it if I were a realtor.

    Invite her off of your team.

    1Reply
  • Natalie KolodijBusiness Member
    Moderator
    Tax Strategist| National Tax Educator| Accepting New Clients · Member since 2014 · 3k+ posts · 4k+ votes
    6y

    The "someone with rentals can't have a home office" 

    Is LITERALLY the final argument that caused me to quit working for a CPA firm. 

    I don't care if you've done this for 40 years- if you won't listen to reason, tax code, and accept that you could be wrong. You're doing your clients a disservice. 

    Your lack of knowledge screwing clients out of deductions is a huge disservice. 

    Podcast Guest on Show Pay Less Tax to the IRS This Year With THESE Real Estate Tax Strategies
    Kolodij Tax & Consulting
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    1Reply
  • Oleksandr IvanovskiyPro Member
    OP
    Rental Property Investor · Member since 2019 · 124 posts · 38 votes
    6y

    @Natalie Kolodij

    Natalie thank you for your response.

    I’m new to this and would like to get every deduction possible without dealing with IRS.

    1Reply
  • Natalie KolodijBusiness Member
    Moderator
    Tax Strategist| National Tax Educator| Accepting New Clients · Member since 2014 · 3k+ posts · 4k+ votes
    6y
    Originally posted by @Oleksandr Ivanovskiy:

    @Natalie Kolodij

    Natalie thank you for your response.

    I’m new to this and would like to get every deduction possible without dealing with IRS.

    Absolutely- the tax benefits are one of the best parts of REI.

    I'd recommend speaking to some REI specialized tax pros and finding one who you'd work well with.

    Podcast Guest on Show Pay Less Tax to the IRS This Year With THESE Real Estate Tax Strategies
    Kolodij Tax & Consulting
    WebsiteView Page
    0Reply
  • Oleksandr IvanovskiyPro Member
    OP
    Rental Property Investor · Member since 2019 · 124 posts · 38 votes
    6y

    @Ryan Proffit

    If you provide a substitute I will think about it.:)

    0Reply
  • Ryan Proffit
    Saint Joseph, MO · Member since 2018 · 401 posts · 244 votes
    6y
    Originally posted by @Oleksandr Ivanovskiy:

    @Ryan Proffit

    If you provide a substitute I will think about it.:)

     Look above.  Natalie seems to know her stuff.

    0Reply
  • Oleksandr IvanovskiyPro Member
    OP
    Rental Property Investor · Member since 2019 · 124 posts · 38 votes
    6y

    @Ashish Acharya

    I’m not relying on internet when it comes to taxes.

    They have been doing my taxes for 17 years.

    Are you working with out of state clients?

    0Reply
  • Ashish AcharyaBusiness Member
    CPA, CFP®, PFS · Sarasota, FL · Member since 2017 · 5k+ posts · 3k+ votes
    6y
    Originally posted by @Oleksandr Ivanovskiy:

    @Ashish Acharya

    I’m not relying on internet when it comes to taxes.

    They have been doing my taxes for 17 years.

    Are you working with out of state clients?

    Yes we do. We have clients in 40 COUNTRIES. 

    [email protected]941-914-7779
    INVESTOR FRIENDLY CPA®4.9242 Reviews
    WebsiteView Page
    TaxMD® | Tax Planning Software
    WebsiteView Page
    0Reply
  • Ryan Proffit
    Saint Joseph, MO · Member since 2018 · 401 posts · 244 votes
    6y
    Originally posted by @Natalie Kolodij:

    Your tax adviser isn't familiar enough with how real estate overlaps with IRC 162.

    Ask her if you also qualify for the 199A deduction. 

    If your rentals rise to the level of a trade or business per IRC 162 (which, most do) you qualify for both. 

    Also home offices haven't been a red flag in quite a while since now so many people work remotely.

    AND

    Having a home office increases the qualifying deductible miles you have substantially since it converts drive time from home to REI related things from non-deductible commuting to deductible miles.

    And THIS is why you hire a tax pro who is specialized in REI, and don't rely on any general information on the internet.

    Is there a tradeoff to claiming the 199A deduction?

    0Reply
  • Natalie KolodijBusiness Member
    Moderator
    Tax Strategist| National Tax Educator| Accepting New Clients · Member since 2014 · 3k+ posts · 4k+ votes
    6y

    Well that took an unexpected turn 

    Podcast Guest on Show Pay Less Tax to the IRS This Year With THESE Real Estate Tax Strategies
    Kolodij Tax & Consulting
    WebsiteView Page
    1Reply
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