Today TaxMama hears from Maggie in North Carolina who says, “I am new to this site courtesy of Wayne Davies. http://hop.clickbank.net/?taxmama/taxguide I have a small pottery business of over 30 yrs. Last year we took up our first ever mortgage to buy property for a gallery. Our home…where we work, was mortgaged to pay for the new place. I now have 2 places of business. Can I deduct the mortgage payments as a business expense?”
Congratulations on your new gallery!
It’s obviously thriving enough for you to buy a place. I always think that’s a great idea for a business. So, how do you treat this mortgage?
Well, if you drew the money to use for the business, have the business pay the mortgage AND take the deduction.
If your business is not incorporated or using any formal structure, then, everything is happening in your own Schedule C. There’s a line there for Mortgage Interest. Use that instead of your Schedule A.
And if you’re still actively using your home as your business office, you may take an office in home deduction and depreciate your home, and deduct the utilities and all that.
You’ll find some information about that here:
Office in Home
And more in my book, if you need it.
If you haven’t made the decision about incorporating or setting up an LLC yet, please do read Wayne’s books on incorporating. It will open your eyes!
Once you do form an entity, you’ll want to write a formal lease agreement between yourself and the company. Then come talk to Wayne, and he’ll guide you on the next step. You see, his book comes with a couple of hours of consultation time with him.
And remember, you’ll find answers to lots of questions about business deductions and other tax information, free. Where? At TaxMama.com[Note: If you were subscribed to the e-mailed TaxQuips, you’d be getting other exciting news and tips. Please click on the subscribe link and join us.]
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