Written for: Your Home Concierge Service, LLC., a Bradenton Home Sitting Service
By Leighton Q. J. Klevana
A number of readers have requested information as to the deductibility of home service expenses for Federal Income Tax purposes. The key to such deductibility is that the expenses qualify as legitimate business expenses pursuant to our US Federal Income Tax laws and regulations.
Expenses of a personal nature as well as other expenses which do not qualify as a business expense are not deductible for Federal Income Tax purposes.
Business expenses are the costs of carrying on a trade or business. In order for such expenses to be deductible, the expense must be both ordinary and necessary … an ‘ordinary’ expense is one that is common and accepted in the trade or business and a ‘necessary’ expense is one that is helpful and appropriate in your trade or business. Also, as for the business, it must be operated so as to make a profit.
If you use a home as a rental property to generate income, for tax purposes that would be considered a business and as such your ordinary and necessary expenses in that business are deductible.
If your business is operated in your home or a portion of your home, the expenses may be deductible if the portion our home for which a tax deduction is sought is used exclusively for business purposes. If the services which benefit the business are performed in the entire home while only a portion of the home is used for business, the tax deductible expense is prorated on the basis of some formula … area or some other fair method of allocating the expense.
The items of expense which are deductible for Federal Income Tax purposes may include some of the expenses incurred for services ordinarily performed for home owners. Of course, the expense must be for services performed in the portion of the home utilized for business and the service must benefit the business.
Some of the services for which expenses are deductible as deductible business expenses include monitoring of the home and property for pest infestation, water leaks, and other problems, checking the proper functioning of appliances and utilities, cleaning of the home and maintenance, watering house plants, performing minor repairs, replacing worn out batteries and air filters on your air conditioning system, picking up/forwarding mail, and other services which directly or indirectly are required or benefit your business.
See a tax professional before taking these expenses as tax deductions on your Federal income tax return. Also, see IRS Tax Publications 530 and 587 for a more detailed explanation of these tax deductible home expenses.