Level 2

Home Office - Two Properties

Forum|Forum|3 years ago
June 6, 2023
2 replies
10 views

Client moved mid-year and thus had 2 home offices during tax year. The former home had a carryforward of previously unallowed expenses. I know that if the business ceases to operate, the expenses are lost...however I cannot find a definitive answer if the prior home's expenses carryforward. Can anyone cite a reliable source or share what they have done in practice in this scenario?

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qbteachmt

Level 15

I know how a business can have carry-forward expenses (having had a loss), but how does a home have carry-forward of expenses or even unallowed expenses? You don't write off the home. You include in your business the operating costs associated with the office space, which can be in a home, but that is a business activity, not a home activity. A home is not the filing entity.

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TaxGuyBill

Level 15

@qbteachmt wrote:

I know how a business can have carry-forward expenses (having had a loss), but how does a home have carry-forward of expenses or even unallowed expenses? You don't write off the home. You include in your business the operating costs associated with the office space, which can be in a home, but that is a business activity, not a home activity. A home is not the filing entity.

You missed the title of the post and the first sentence. This is a Home Office, and is referring to the office carryforward of unallowed expenses.

sjrcpa

Level 15

"what they have done in practice in this scenario?"

In practice the software carried it over and I let it.

The more I know the more I don’t know.

IRonMaN

Level 15

I have nothing authoritative, but the expenses are tied to the business, not the house. So I would bet a dime, maybe even a quarter, that the expenses remain until they are either used or the business ceases to exist.

Slava Ukraini!

qbteachmt

Level 15

"and is referring to the office carryforward of unallowed expenses."

Exactly. The business uses space as an office, which is why the perspective of which property, or that the old property had disallowed expenses, is a strange perspective. And disallowed expenses because not qualified or because there is a business loss? Again, it's not dependent on the home.

Look to the Business. Not to the home office.

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