Paint, Home Improvements, etc.

[wdmmom]

I have a few questions:

Earlier this year, we had an issue with one of our porch beams rotting. We decided to take down the railing surrounding the porch and have another beam put up instead. We also painted them. This has drastically improved the look of our home from the outside.

It would have been a potential liability if we didn't have it corrected. My question is: can it be claimed on taxes for the daycare since this porch is used everyday to do arrivals and departures?

We also purchased a freezer awhile back. I make up the kids daycare menu for breakfast and lunch a month ahead of time so I always make sure to either make up or purchase everything and freeze it until its time to use it. Can this be used as a tax deduction.

This weekend we will be giving the daycare room a much needed make over. Paint, trim, etc. Are these tax deductible items?

[Michael]

Maybe Tome Copeland will have am answer for you. Here are threads on deductions for Home Improvement: http://daycare.com/forum/tags.php?ta...me+improvement

[TomCopeland]

There's a difference between a home improvement and a repair. A home improvement is something that increases the value of your home. A repair maintains the value of your home. A home improvement must be depreciated over 39 years. A repair can be deducted in one year.

Replacing rotting porch beams is a repair. Painting a room is a repair.

Multiply these costs by your time-space % and deduct them this year.

Using a freezer in your business is deductible. Multiply the cost by your time-space %. Since it cost more than $100, you must depreciate it over 7 years. If you use it more than 50% of the time for your business, you may use the Section 179 rule and claim it all in one year.

[wdmmom]

Thanks Tom!

We have our own family freezer. We bought this one solely for the daycare. I'll be sure to let my tax professional know.

I appreciate your help!

[Abigail]

If I bought a microwave and a mini fridge for our daycare kitchen room used exclusively for daycare, would I still need to use my time-space percentage on the cost of the items or can I use the actual cost paid?

Also, I've driven to many different places in town to purchase daycare items from craigslist, can I use the addresses and the distance between where i picked it up from and my home to use for miles towards daycare use since I only went to the address to purchase daycare items? If that's the case, I've gone many many miles!

[TomCopeland]

If you use the microwave and minifridge 100% for business, deduct 100% of the cost.

Yes, count all your miles driving around to buy Craigslist items, as long as the "primary" purpose of the trip was for your business.

[Mrs. CC]

What would replacing carpet be considered? I am sure someday we would have done it, but we had off white carpet (previous owner picked it). Now it is so dirty and dingy that I want it out. The kids spill everything all the time and they track in so much mud and other things.

If we switched to laminate in the room they stay in the most often can I do anything financially through the business?

I guess I worry that I can't because it is still in our home and not dedicated to the biz. But this carpet really isn't a great idea for my DCKs.

[TomCopeland]

Originally Posted by Mrs. CC

What would replacing carpet be considered? I am sure someday we would have done it, but we had off white carpet (previous owner picked it). Now it is so dirty and dingy that I want it out. The kids spill everything all the time and they track in so much mud and other things.

If we switched to laminate in the room they stay in the most often can I do anything financially through the business?

I guess I worry that I can't because it is still in our home and not dedicated to the biz. But this carpet really isn't a great idea for my DCKs.

If you replace a carpet, you can claim the remaining depreciation you have not yet claimed on the old carpet. Then you depreciate the new carpet over 7 years. If you replaced the carpet with laminate you would depreciate the laminate over 7 years. Use your time-space percentage to determine the business portion you can depreciate.

[Abigail]

How do you depreciate current carpeting? I didn't know that was possible! If the daycare kids only use my lower level, but I use the upper level for various daycare activities that the kids don't touch do I still depreciate the upstairs carpeting?

[TomCopeland]

Originally Posted by Abigail

How do you depreciate current carpeting? I didn't know that was possible! If the daycare kids only use my lower level, but I use the upper level for various daycare activities that the kids don't touch do I still depreciate the upstairs carpeting?

Carpeting is considered "personal property" that is depreciated over 7 years. If you are using the upstairs carpeting you can still depreciate it, even though the day care children do not use it. Use your time-space %.

[Abigail]

If the carpet was here before daycare started how do I know the depreciation value of it? can you give an example? Does the same go for laminate flooring in the hallways and kitchen?

[TomCopeland]

Originally Posted by Abigail

If the carpet was here before daycare started how do I know the depreciation value of it? can you give an example? Does the same go for laminate flooring in the hallways and kitchen?

Let's say you bought carpeting in 2005 for $1,000. In 2010 your business began. In 2012 the carpet was replaced. Let's say your time-space % has consistently been 40%.

You should have started depreciating the carpet in 2010 based on what it was worth in 2010. This is an estimate. Maybe the carpet was worth $400 in 2010. $400 x 40% = $160 worth of depreciation to be claimed over 7 years. You would claim $22 in 2010 ($160 x 14.29%). You would claim $39 in 2011 ($160 x 24.49%). Since it was replaced in 2011, you claim the remaining depreciation in 2011 as well: $160 - $22 - $39 = $99.