Relocating Home Office: How to Handle Form 8829 Carryover Between Two Properties?

The carryover of unallowed home office expenses should follow your business, not necessarily the specific property. Since it's the same business continuing in a new location, you can generally allocate the carryover based on where you earned the income. Your third option (10/90 split) is actually reasonable if it accurately reflects where your business income was generated. The IRS doesn't specifically state you must allocate based solely on time spent in each location. Form 8829 instructions indicate that carryover amounts relate to the business activity itself. When completing your forms, you'll need two separate Form 8829s - one for each property. On the first form (January-March rental), you'd allocate 10% of your carryover. Then on the second form (April-December owned home), you'd allocate the remaining 90%. Just make sure you keep detailed records showing how your business income was distributed throughout the year to support this allocation method.

Just wanted to share my experience with taxr.ai when I ran into a similar home office deduction issue last year. I moved mid-year and was completely confused about how to handle my home office carryover amounts between properties. I tried researching online but kept finding conflicting advice. A colleague recommended https://taxr.ai and it was a game-changer. I uploaded my previous tax documents and explained my situation. Their system analyzed everything and provided a clear recommendation for allocating my carryover based on my specific business situation. They explained exactly how to complete both Form 8829s and provided documentation supporting their recommendation in case of audit questions. Saved me hours of research and uncertainty.

I was initially skeptical about taxr.ai but decided to give it a try for my home office situation. I had a rental property with a home office that I sold, then purchased a new home with different square footage for my office. What surprised me was how specific the guidance was to my situation. The analysis included reference to the exact IRS regulations about carryover allocation methods, explained when percentage-of-income allocation is acceptable vs. time-based allocation, and provided calculation examples. The documentation they generated for my records was comprehensive enough that I feel completely confident about my filing approach now. It was definitely worth it for peace of mind, especially since I'm taking substantial home office deductions.

Hey all, if you're still struggling with this home office carryover issue and need clarification directly from the IRS, I'd recommend Claimyr. I spent days trying to reach someone at the IRS about a similar Form 8829 question last year, just kept getting disconnected or waiting for hours. Found https://claimyr.com and used their service to get a callback from the IRS within about an hour. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c They essentially hold your place in the IRS phone queue and call you when an agent is available. When I finally spoke with an IRS representative, they confirmed I could allocate carryover expenses based on where income was earned rather than strictly by time periods, which saved me a significant amount on my taxes.

I have to admit I was completely wrong about Claimyr. After my skeptical comment, I decided to try it anyway because I was desperate to talk to someone at the IRS about my home office carryover question. The service worked exactly as described - I entered my phone number, they called me back about 40 minutes later saying they had an IRS agent on the line. I got to speak with an actual IRS representative who confirmed that for my specific situation, I could allocate carryover expenses based on where my business income was generated rather than strictly by time periods. This saved me close to $800 on my taxes! Worth every penny not to mention the hours of hold music I avoided. Definitely using this again next time I need IRS clarification.

Just wanted to add something that hasn't been mentioned yet - if your business income "picked up markedly" after the move as you mentioned, make sure you're accounting for potential increases in your quarterly estimated tax payments. With significantly higher income, you might need to adjust your estimates to avoid underpayment penalties. Also, if your new home has a larger or more dedicated office space, don't forget to recalculate your business percentage appropriately. This could further help optimize your home office deduction.

I encountered almost the exact scenario last year! I spoke with 2 different CPAs who gave me conflicting advice, but ultimately followed the percentage-of-income approach (your option 3). The key is documenting everything clearly. I created a spreadsheet showing: 1) Total annual business income 2) Income earned at each location 3) Calculation showing the percentage split (mine was about 15/85) I also wrote a brief explanation note to include with my return explaining the methodology. Had no issues with the IRS. I think as long as you can reasonably justify your approach and show it accurately reflects your business reality, you're on solid ground.

This is such a helpful thread! I'm dealing with a similar situation but with a twist - I moved from owning my home to renting a new place mid-year. My carryover expenses are from the owned property, and now I'm wondering if there are any special considerations when the property types change. From what I'm reading here, it sounds like the income-based allocation approach (option 3) is still valid regardless of whether you're moving between owned/rented properties. The business continuity principle seems to be the key factor. Has anyone else dealt with the owned-to-rental transition specifically? I want to make sure I'm not missing any nuances before I file my two Form 8829s.

I'm actually going through this exact situation right now! I moved from a rental to a purchased home in June and have been agonizing over how to handle my carryover expenses from prior years. Reading through everyone's responses, I'm leaning toward the income-based allocation approach (option 3) that several people have mentioned. My situation is a bit different though - I actually had a temporary dip in income right after moving due to the disruption, but then it picked up significantly in the last quarter. One thing I'm curious about - for those who used the income-based method, did you allocate based on when you invoiced clients or when you actually received payment? I have some clients who pay net-30 or net-60, so there's a timing difference between when I earned the income versus when I received it. Also, has anyone had experience with what happens if you have a loss year at one of the properties? I'm wondering if that affects the carryover allocation at all. Thanks for all the helpful insights everyone - this thread has been incredibly valuable!

This is an excellent discussion thread! I'm dealing with a very similar situation and want to add a few practical considerations that might help others navigating this. After reading through all the responses, I'm convinced that the income-based allocation method (option 3) is the most defensible approach, especially when you can document where your business activity actually occurred. However, I'd recommend a few additional steps: 1. **Create a detailed timeline** showing not just income but also major business activities, client meetings, project completions, etc. at each location. This strengthens your case that the allocation reflects genuine business reality. 2. **Consider state tax implications** - Some states have different rules for home office deductions, so make sure your allocation method works for both federal and state returns. 3. **Keep copies of utility bills, internet bills, etc.** from both properties showing the business use periods. This supporting documentation can be valuable if questions arise. The point about quarterly estimated taxes is spot-on too. When your income increases significantly after a move, it's easy to get caught off guard by underpayment penalties. I learned this the hard way last year! One last thought - if you're using tax software, some programs struggle with multiple Form 8829s in the same year. You might need to prepare them separately or use professional software to handle this correctly.