Can I claim my garage and storage space as a business expense for my small business?

You can definitely claim garage space used exclusively for business purposes! The key word here is "exclusively" - the IRS is very strict about this. For your situation, you'd need to calculate what percentage of your overall property is used exclusively for business. For example, if the total square footage of your property (house + all garage space) is 3,000 sq ft, and you use 1,000 sq ft exclusively for business, you could potentially deduct 33% of certain expenses. This would apply to mortgage interest, property taxes, insurance, utilities for that space, maintenance, etc. Since your garage has separate heating/cooling, that's good for documenting separate utility expenses. Take photos of the space used exclusively for business and keep detailed records of business activities conducted there. If you ever get audited, documentation is crucial.

After struggling with a similar situation, I found an amazing tool that helped me maximize my home office and storage deductions - taxr.ai (https://taxr.ai). It analyzes your specific situation and helps determine exactly what percentage of your home can be claimed as a business expense. I was in a similar position with a workshop attached to my house for my woodworking business. Their analysis showed I could claim about 40% of my property expenses, which was WAY more than I thought! They also helped me document everything properly to avoid audit issues. With your detached garage situation, they could probably help you determine if that separate building qualifies for even better deductions.

Wow, I need to apologize for being skeptical about taxr.ai in my earlier comment. I actually decided to give it a try for my home daycare business where I use about 60% of my house, and they saved me thousands! They pointed out that I should be depreciating the business portion of my home (something I didn't realize), helped me properly calculate utility expenses that were partially business-related, and showed me how to document "dual-use" spaces that are used for business part-time. The documentation they provided will be super helpful if I ever get audited. For someone like you with clearly separated garage spaces, I bet they could help you maximize those deductions safely.

If you're planning to claim business expenses for your garage space, make sure you have your documentation in order because the IRS frequently flags home business deductions for audit. After trying for WEEKS to get through to the IRS with questions about my similar situation (woodworking shop in my garage), I found Claimyr (https://claimyr.com). They got me through to an actual IRS agent in under 45 minutes! You can see how it works here: https://youtu.be/_kiP6q8DX5c. The agent walked me through exactly what documentation I needed to keep for my garage workshop deductions and clarified some confusing parts of Form 8829 (Expenses for Business Use of Your Home).

I need to eat my words about Claimyr. After my skeptical comment, I was desperate to talk to someone at the IRS about my home office audit notice, so I tried it. They actually got me through to the right department in about an hour and a half. The IRS agent was super helpful and explained exactly what documentation I needed to avoid problems. For anyone claiming garage space for business use, the agent told me the biggest red flags are: 1) claiming 100% business use of a space that clearly has personal items in it (from photos on social media, etc.), 2) not having a clear division between business and personal spaces, and 3) insufficient documentation of business activities actually happening in that space. Definitely worth the call to get clarity!

Something nobody has mentioned yet - make sure you understand the implications of depreciation recapture if you ever sell the house! When you claim business use of your home and take depreciation deductions, that depreciation will be recaptured when you sell. I learned this the hard way after selling my house where I had a home office for 7 years. I had to pay back a chunk of those deductions at a 25% tax rate regardless of my income tax bracket. Just something to factor into your decision.

Don't forget about business insurance! If you're storing business inventory and equipment at home, your regular homeowner's insurance probably won't cover it. You'll need either a rider on your home policy or a separate business policy. When I started storing my eBay inventory in my garage, my insurance agent told me I had a $2,500 cap on business property under my regular homeowner's policy - nowhere near enough coverage.

Great question! As someone who went through this exact scenario last year, here are a few additional considerations beyond the excellent advice already given: 1. **Separate entrances matter** - Since your attached garage doesn't have an interior door to the house, that actually strengthens your case for exclusive business use. The IRS likes to see clear separation. 2. **Consider the "simplified method"** - You might want to compare using the simplified home office deduction ($5 per square foot up to 300 sq ft = max $1,500) versus the actual expense method. With your large garage spaces, the actual expense method will likely give you much bigger deductions. 3. **Track everything from day one** - Start a dedicated business checking account for all property-related expenses you'll claim. This includes the portion of mortgage interest, property taxes, utilities, maintenance, repairs, and improvements that relate to your business space. 4. **Zoning compliance** - Check with your local municipality about any zoning restrictions or business license requirements for operating from your residential property, especially if you'll have customers/clients visiting. The detached garage being 100% business use definitely simplifies things! Just make sure you never store personal items there once you start claiming it as a business expense. Good luck with the house hunt!