QUESTION:
Hi David, I have (hopefully) a simple question for you.
I have an at home Ebay business that has grown over time. Last year I spent
$8000 and built a garage/office to house inventory and work out of. My
question is, how do I deduct the cost of the building and what rate do I
amortize it at and what form should it go on? Not sure if this matters but
my local tax authority valued the building at $12,000. Can I use that number
or only what it actually cost me? I kept all receipts for work. Lastly, can
I claim myself for labor costs? (I did 90% of the building myself).
thank you
----------------------------------------
david ingram replies:
If you are in the USA (as i know you are) you would depreciate the $8,000
you paid for it over 31.5 years - use US form 4562 and put the depreciation
on your schedule E. If you borrowed to build it, the interest is a better
deduction here than on schedule A. You do not get to deduct for your labor.
If you were in Canada, you would NOT depreciate it because the policy of the
CRA is to want to tax a percentage of the property because of the
depreciation claimed. (see CRA Bulletin IT 120 R6)
I love eBay and have bought over 300 thinks on it. In the last week have
bought a Master cylinder for my 1953 Sheriff's car (which came in second in
the North Vancouver Canada Day Parade on July 1), a grill piece for the
front of the car which is a 53 Chevy, a set of 6 volt musical horns (to play
Dixie) and another four or five 12 volt musical horns.)
Also made offers on a couple of Jeep Grande Wagoneers.
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