Can I claim tax deduction for home office construction costs as K1 partner?

15 Thanks for the info. Follow up question - what if the firm itself pays for the construction directly rather than me personally? Would that change how it's treated tax-wise? Also, do you think I need to worry about recapture if I sell the house in a few years?

8 If your firm pays for the construction directly, that creates a different situation. The firm would depreciate the improvement as an asset on its books over 39 years. However, this could potentially be considered a taxable fringe benefit to you personally since it increases your home's value. Regarding recapture, yes, that's an important consideration. If you claim depreciation on a portion of your home and then sell the property, you'll likely face depreciation recapture taxes. The depreciation you've taken must be "recaptured" and taxed at a 25% rate, which is higher than most capital gains rates. This is something many people overlook in home office planning.

19 How does this actually work? Do you just upload your receipts and it tells you what to do? I'm having a similar issue with a renovation I did for my rental property and the depreciation rules are confusing me.

3 I'm skeptical about these kinds of services. Does it actually connect you with a real tax professional or is it just some AI thing summarizing IRS publications you could read yourself?

12 You upload your documents and receipts, and it analyzes them using specialized tax algorithms. It categorizes expenses into immediate deductions versus those that need depreciation, and generates a report explaining each decision with relevant tax code references. It's way more thorough than just skimming IRS publications yourself. For rental properties, it would definitely help distinguish between repairs (fully deductible) and improvements (which must be depreciated) - that's a common area of confusion that can make a huge difference tax-wise. It's not just an AI summary - it provides specific actionable guidance tailored to your documents, though you can also chat with their tax experts if you have questions about the recommendations.

9 Wait, does this actually work? I've literally called the IRS like 10 times about my identity verification issue and can NEVER get through. How much does it cost? Is it actually worth it?

21 This sounds like a scam. How exactly does some random company get you through to the IRS faster than calling directly? The IRS phone system is notoriously bad for everyone.

6 It absolutely works - they use a system that navigates the IRS phone tree and holds your place in line, then calls you when an agent is about to pick up. I got through in 17 minutes when I had previously wasted hours and never reached anyone. For identity verification issues, this would definitely help since those often require speaking to a specific department. The time saved is absolutely worth it - I spent over 8 hours across multiple failed attempts before using this service. I can't speak about pricing here, but I can tell you that the clarity I got about my specific situation saved me way more than what I paid for the service. The IRS agent explained exactly which form I needed to use for my partner home office situation.

4 Can you explain more about these unreimbursed partnership expenses? My CPA hasn't mentioned this as an option for my home office expenses. How would it be better than the regular home office deduction?

17 Unreimbursed partnership expenses (UPEs) are business expenses you pay personally that benefit the partnership, but aren't reimbursed. Before the Tax Cuts and Jobs Act, these were deductible on Schedule E as "not subject to the 2% floor" for miscellaneous itemized deductions. The benefit compared to regular home office deductions is that UPEs aren't subject to the exclusive use test and don't require depreciation over 39 years. However, your partnership agreement must explicitly state that partners are required to pay these expenses without reimbursement. Many CPAs miss this because the rules changed in 2018. Definitely worth discussing with your partnership's tax advisor as it could significantly impact how you handle the construction costs.

2 Really? I thought Section 179 couldn't be used for structural components of a building. How exactly would you separate those systems from the overall construction costs?

You're right to question that - structural components like walls, floors, and roofing generally can't use Section 179. However, certain equipment and fixtures can be separated out if they're not integral to the building structure. For example, standalone HVAC units, electrical panels specifically for office equipment, and removable built-in furniture might qualify. The key is having your contractor itemize these separately on invoices and being able to demonstrate they could be removed without damaging the building's structure. It requires careful documentation and may not apply to a large portion of your $42,000, but every bit helps when you're looking at 39-year depreciation otherwise.