How to Write Off Business Taxes for an Apartment

how to write off taxes

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When you run a business out of your home, you can write off a percentage of your home's operating expenses as business expenses on your income taxes. Allowable expenses include your mortgage, insurance, repairs, utilities and property taxes. Although most individually owned apartments are called condominiums, you can write off a portion of the taxes paid on the apartment if you own the area. By writing off a portion of your taxes and expenses, you will lower your business income and pay less tax to the Internal Revenue Service.

Step 1

Download Form 1040, Schedule C, and Form 8829 from the IRS website.

Step 2

Enter your business income and expenses in Schedule C. Add all your expenses together and enter the total in the line labeled "Total Expenses."

Step 3

Enter the square footage of the area in your apartment that you use for business in the line labeled "Area Used Regularly and Exclusively for Business" on Form 8829.

Step 4

Enter the total square footage of your apartment in the line labeled "Total Area of Home" in Line 2.

Step 5

Divide the square footage of your office or work area by the total

square footage of your apartment. Enter the result as a percentage in the next line. For example, if your apartment is 1,000 square feet, and your work area is 100 square feet, divide 100 by 1,000 to get the percentage. The result will be a decimal, and you must move the decimal two places to the right to change the number to a percentage. Using the previous example, 0.1 is 10 percent.

Step 6

Transfer the amount of your total business expenses from Schedule C to the first line in the "Figure Your Allowable Deduction" section on Form 8829.

Step 7

Enter the total amount you paid for taxes on the apartment in the line labeled "Real Estate Taxes."

Step 8

Multiply the total amount of taxes you paid by your business percentage. This amount represents the taxes you can write off. Complete Form 8829.

Transfer the amount in the line labeled "Allowable Expenses for Business Use of Your Home" on Form 8829 to the "Expenses for Business Use of Your Home" line on Schedule C.

Complete Schedule C to determine your net profit or loss. Transfer this amount to the line labeled "Business Income or Loss" on Form 1040.

Source: yourbusiness.azcentral.com

Category: Taxes

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