Major Tax Savings

Heavy Vehicle + Deductible Home Office = Major Tax Savings

You can reap major tax savings with the heavy vehicle and home-office combo. The heavy vehicle produces quick deductions. The home office that qualifies as a principal office eliminates commuting miles, and such an elimination can dramatically increase your business-use percentage of vehicles.

For example, say you bought a $50,000 vehicle that you use 60 percent for business. Your depreciation and expensing elections apply to $30,000. But if you can increase your business percentage to 90 percent with a tax code–defined principal office in your home, your base for tax deductions increases to $45,000—that’s a $15,000 increase, and you did not spend a penny or drive a mile farther to capture it.

Give us a call at (610) 863-8347 today for a free consultation!

Stay tuned for more tax tips from Corvino and Verwys.

Beat the Recapture Tax on Your Home Office

The depreciation you claim with your home-office deduction is subject to a recapture tax when you sell your home.

But you may be able to avoid the recapture tax by following one easy step when it comes time to sell your current home and buy a replacement. And you not only avoid the recapture tax, but you also increase your tax basis in your replacement home. This gives you a double dip in tax benefits.

You make this work by following IRS Revenue Procedure 2005-14, which shows you how to combine the tax-favored Section 1031 tax-deferred exchange and the Section 121 home-sale exclusion rules so that you can sell your home and

1. avoid some or all the taxes on the sale of the personal part of your home,
2. avoid and/or defer some or all the taxes on the sale of the office part of your home,
3. avoid and/or defer some or all the taxes on the sale of the rental part of your home, and
4. defer all the taxes on the depreciation recapture caused by the office or rental part of your home.

Before you take any steps to sell your home, contact us at (610) 863-8347 so we can help you make this tax-saving strategy work for you.