Can You Write Off Your Home Garage as a Body Shop Owner?

If you own a collision repair facility, you likely do some repair work in your home garage; perhaps, you even use your garage as a home office. Great news – you may be able to claim a home office deduction on your taxes, but there are a lot of variables.

First, the extent to which a home garage is eligible for a home office deduction depends on whether it’s attached or detached. An attached garage could be eligible for a home office deduction if it meets the criteria of being your principal place of business, or a place where you physically see customers on a regular basis, as long as the space is used exclusively for your business.

A detached garage is a separate, free-standing structure, and the criteria for claiming this space as a home office isn’t as strict – you can deduct expenses if it’s used “exclusively and regularly for your business,” according to the IRS, but beware: taxes on capital gains are calculated differently for structures that aren’t part of the main dwelling unit.

So, your deduction will be based on what percentage of your home the garage encompasses. You’ll be able to deduct a correlating portion of your mortgage interest, insurance and utilities, but there are other possible expenses that can be included as well, such as repairs and furnishings. Major repairs, considered improvements, must be depreciated over the years.

Hey, I get it… the rules about what can be deducted and how to calculate the deduction for your home office can be confusing and frustrating, but it’s worth taking a look at if you’d like to reduce the amount of taxes owed! If you’d like to maximize your home office deduction, grab a spot on my calendar so we can look at your unique situation together.