If you run a business from home, you may be using things you first bought for personal use, such as a desk, a computer or a printer. When you start working at home and use those items for business, you may be able to depreciate them. Here is how the rules work.
Note: These deductions are for self-employed people and business owners. Employees who work at home generally can’t deduct these costs on their federal returns.
Depreciating personal items you now use for business
When you convert an item from personal to business use, the law treats it as placed in service in your business on that date. From then on, you can depreciate the business-use share. For example, if you use a desk 85% for business, you can depreciate 85% of its basis.
Figuring your depreciable basis
Your basis for depreciation is the lesser of two amounts:
- the item’s fair market value on the date you convert it, or
- your adjusted basis, which is generally what you paid plus any improvements.
For example, say you bought a desk set for $8,000. Later, it is worth $6,000 when you start using it for business. So your depreciable basis is $6,000. For inherited items, your basis is generally the value on the date of death.
Keep in mind that some items, such as true antiques and art, generally can’t be depreciated, because they don’t wear out.
Section 179 and bonus depreciation
Unfortunately, you can’t use Section 179 expensing for property you convert from personal to business use. However, converted property may qualify for bonus depreciation, depending on when you acquired it. The bonus rate has changed over the years, and the 2025 tax law restored 100% bonus depreciation for property acquired after January 19, 2025. So check the rules for your item’s purchase date. For details, see IRS Publication 946.
Your basis when you sell a converted item
When you later sell a converted item, you use different bases for gains and losses:
- For a loss: use your conversion basis (the lesser amount above), minus depreciation.
- For a gain: use your original cost, minus depreciation.
Examples of working at home deductions on a sale
Take the desk set from above: cost $8,000, worth $6,000 at conversion. To keep things simple, ignore depreciation.
- Loss: You sell it for $4,000. So you have a $2,000 deductible loss ($6,000 − $4,000). By contrast, a loss on a personal item isn’t deductible at all.
- Gain: You sell it for $10,000. So you have a $2,000 gain ($10,000 − $8,000).
- Neither: You sell it for $7,000. Since that is between the two bases, you have no gain and no loss.
If you also use a room only for business, you may qualify for the home office deduction too. See our guide on how many rooms you can use for a home office.
Get help with your working at home deductions
We help business owners claim depreciation and home office deductions correctly. To learn more, call (415) 842-2940 or book a free 15-minute call.