Live-Work lofts: what is the tax break exactly?

[narikin]

I was looking at a midtown Live-Work loft the other day (quite nice, but pricey, or course) and was informed it was a true live-work, which is good for me - and that this meant some tax advantages to self employed folks (like moi)

can anyone shed more light on this, so I am able to understand what I get in the way of a tax break, over and above a regular co-op apt?

(+ any downside to it?)

thanks

[lofter1]

My understanding is that if part of your condo space is fully dedicated to work then you are allowed a business-related deduction based on the percentage of the space so allocated.

But you should talk to your accountant about that to make sure.

[ryan]

My limited understanding is that it doesn't matter what you call the space - that any space used exclusively for work can be used to help out taxes for that business. I know people who claim a portion of the rent they pay for plain-old apartments - is there a legal classification for "live/work"?

[lofter1]

In New York City there is a specific zoning classification for "Joint Living Work Quarters for Artists" (as an example of the zoning language go HERE (http://www.nyc.gov/html/dcp/pdf/zone/art11c01.pdf) to Page 14, Section 111-11 in the NYC Dept. of City Planning Zoning Resolution for the Tribeca "Special Purpose District").

That ^^^ pertains to live / work in Manufacturing zones in NYC.

In other parts of NYC live / work is allowed where one does business out of one's home, but there are limitations outlined in the zoning regulations (for example, hair salons are not allowed in certain zoning area / buildings).

For the IRS the rule seems to be that the space used for business is 100% dedicated to the business purpose (i.e.: technically an office / guest room is not allowed for a deduction because the space serves dual purposes).

[lofter1]

Webpage at the IRS (http://www.irs.gov/newsroom/article/0,,id=108138,00.html) on Home Office Deduction

This would seem to be rquired reading:

Publication 4035, Home-Based Business Tax Avoidance Schemes (PDF 1704K (http://www.irs.gov/pub/irs-pdf/p4035.pdf))

[narikin]

thanks, all very helpful Lofter.

Its all pretty much as one would expect.

a broker threw me by claiming that the place he was showing me had a real tax advantage for self employed as it was a true live-work...

whatever.

[Front_Porch]

Free financial advice is worth what you pay for it, but my accountant has never let me take the home office deduction.

His view has always been that the annual savings is not worth it since it screws up the depreciation/basis calculations when you decide to sell.

check out this link for more:

www.tannedfeet.com/home_business.htm and read the heading
"home office deduction recapture"

ali r.
{downtown broker}