Just bought a house and want to build a home office. Will construction costs be tax deductible for telehealth work?

Yes, you can potentially deduct the construction costs for your home office, but there are some important considerations to keep in mind. First, since you'll be using this space exclusively for your telehealth practice (your 1099 work), you're on the right track. The exclusive use requirement is crucial - the IRS is strict about this, so no dual-purpose spaces. For the construction costs, these would typically be considered capital improvements, which means you'd depreciate them over time (usually 39 years for nonresidential real property) rather than deducting the full amount in one year. However, you might qualify for Section 179 deduction or bonus depreciation for certain components of the renovation. Keep meticulous records of all expenses, take before and after photos, maintain a log of business use, and clearly document that this space is exclusively for your telehealth practice. I'd also suggest getting a floor plan that shows the percentage of your home that the office occupies, as this will determine your deduction percentage. The biggest risk is an audit where the IRS questions whether the space was truly used exclusively for business. Also be aware that when you sell your home, you may need to recapture some depreciation.

After struggling with a similar situation last year, I found taxr.ai (https://taxr.ai) incredibly helpful for navigating home office deductions. I converted my sunroom into a dedicated workspace for my consulting business and wasn't sure how to handle the renovation costs. Their system analyzed my construction receipts and contractor invoices, then broke down exactly what could be depreciated versus immediately expensed. They even identified some electrical upgrades that qualified for Section 179 that my regular accountant missed! The guidance on record-keeping requirements saved me from what would have been some costly mistakes.

Just wanted to follow up after using taxr.ai for my home office conversion! I was honestly blown away by how thorough their system was. I uploaded photos of my basement renovation along with all my receipts, and they created a comprehensive depreciation schedule that my accountant immediately approved. They even caught that my new HVAC system for the office area qualified for a special energy efficiency credit I had no idea about! The best part was how they organized all my documentation into an "audit-ready" file that I can keep for my records. Definitely worth checking out if you're doing any major home office construction like I did.

If you're planning to call the IRS with questions about home office deductions (which I highly recommend), try using Claimyr (https://claimyr.com). I spent DAYS trying to get through to the IRS about my home office construction deductions last tax season. It was a nightmare - either constant busy signals or being disconnected after waiting for hours. Someone recommended Claimyr and I was skeptical, but their system actually got me through to an IRS agent in about 15 minutes. You can see how it works here: https://youtu.be/_kiP6q8DX5c. The agent clarified that for my situation, I needed to use Form 8829 since I was filing Schedule C, and they explained exactly how to handle the depreciation for different aspects of my construction project.

I need to eat my words and apologize. After my skeptical comment, I tried Claimyr out of curiosity and it actually worked exactly as advertised. I got connected to an IRS agent in about 20 minutes when I'd previously spent HOURS trying. The agent I spoke with walked me through exactly how to handle my home office construction costs (splitting between immediate expenses and depreciable improvements) and gave me specific publications to reference. She even emailed me a breakdown of how different construction elements should be categorized. I'm honestly shocked at how helpful this was after my previous failed attempts to get guidance directly from the IRS.

Don't forget about state tax considerations too! I built a home office last year and while the federal deduction was straightforward, my state had different rules about depreciating improvement costs. Also make sure your homeowners insurance covers business use - mine required a rider for the office space.

Quick question for anyone who's done this - if I'm converting my garage to a home office for my 1099 work, can I still claim the deduction if I occasionally use the space for emergency overflow guest parking during holidays? Or does that violate the "exclusive use" requirement?

As someone who went through a similar conversion last year, I'd strongly recommend getting a consultation with a tax professional before you start construction. While the general advice here is solid, your situation as a physician doing telehealth work might have some unique considerations. For instance, if you're seeing patients virtually, there could be HIPAA compliance requirements that affect your office setup - like soundproofing or secure internet connections. These compliance-related expenses might be handled differently for tax purposes than standard construction costs. Also, since you mentioned multiple income streams, make sure you're allocating the office expenses correctly. If you use the space for any of your other work (like administrative tasks for your hospital or clinic positions), the deduction calculation becomes more complex. One thing I wish I'd known earlier: keep a detailed business use log from day one, even before construction is complete. Document every telehealth appointment, business call, or professional task you do in that space. The IRS loves contemporaneous records, and this will be invaluable if you ever face scrutiny. The 39-year depreciation mentioned earlier is accurate, but don't overlook potential immediate deductions for things like office furniture, computer equipment, and certain technology upgrades that might be specific to your medical practice.