Changes...rethinking your space?
It's a time of transition. We sometimes don't realize we are changing or the world is changing, but it is. We had to work at home, if we could, and maybe still are. Jokes abound about which jammies you are going to wear today -- daytime PJs or nighttime PJs? Did I shower today? No. Okay tomorrow is another day....
There are good outcomes from this time. We understand what we value in our lives and yes, being able to work is certainly one of them. Many like to work at home. Many feel they get more accomplished. Comfortable and familiar, working at home saves on car wear and tear, gasoline, food and clothing expense. For some people, it's not their happy space. They need a professional environment, stimulation and engagement from colleagues and in person communication to be more productive. It's a big world and there are opportunities for a variety of situations.
Working at home has additional advantages. Employers save money on office space while they give up some control in monitoring the workplace. Productivity evaluation and responsibility pretty much takes care of this debatable problem.
Here's a "How-to" to make work at home productive and fun:
Set up your workspace
If you can, keep the space separate and designate it as "work space."
Create a routine and stick to it
Have a to do list and use it!
Communicate - so many ways to connect
Take breaks - get some fresh air!
For you, the work-at-homer, there are other benefits. What are they?
Many self-employed people declare a portion of their house as a home office. Section 280A of the Internal Revenue Code allows a taxpayer to take deductions for certain business and rental uses. Maybe you remember this used to be a deduction of caution. Having a home office was once viewed as an automatic way to be audited by the IRS. Since it is now more common, this practice is less.
The IRS has provided written guidelines relating to the business use of a home. Do you think you qualify? View all the details here, or refer your questions to a qualified tax professional. You can also check with a 1031 Exchange professional to see how this may work for you.
Here is an excerpt from a newsletter from Investment Property Exchange Services, Inc.
The long term benefits of declaring a home office is that when you sell the property, a portion of the property can be used for tax deferred 1031 Exchange, instead of potentially having a taxable gain.
In Revenue Procedure 2005-14, the IRS provided guidance how a primary residence can be a “dual use” property and qualify for gain exclusion under Section 121 (the primary residence exemption) and as business or investment real estate, being eligible for tax deferral under Section 1031. This can be very useful if the gain on the property exceeds the $250,000 or $500,000 exemption provided by Section 121.
So whatever your situation, it helps to know there are options. Time to get creative. Rethink your space and how you use it!