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Joined: Nov 2007
Posts: 23
H
Member
I have a 2 car attached garage and a 3 car detached garage. I framed an 8x16 office in the detached garage and it was a lot better than trying to run the business out of the house. However, I don't have a bathroom in my office so when nature calls I must walk to the house.

Now I want a shop. I am tired of storing tools and materials in MY garage.

I just finished an industrial condo bldg. about 10 minutes from my house. The units measure 18x52 with an overhead door and single entry door. The units are roughed for bathrooms. The owner is selling them for 96K. I am considering purchasing one of them.

Now, 2 minutes from my house is another property that has around 1600 square feet. Again with an overhead door and an office and bathroom already built. But the owner is asking 145K. Another unit in the same building sold for 135K and it was an end unit that faced the street. I offered 120K and they countered with 137K. I said no thanks. It's still for sale. I would prefer to have the second property but it's around 42K more.

Last edited by HEI_Inc; 04/11/08 08:35 PM.
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Joined: Dec 2001
Posts: 201
A
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One thing to remember, if using you home as a office, you are depreciating your house.
When I first started I lived with my girlfriend (now wife) who owned a home. I rented a room for an office. Also payed some of utility bills. When we sold the house, we had to pay taxes on the years of me doing this. Big surprise. You depreciate your house when you use it for work/office and show IRS. I currently work out of my new house. Erected a building in the back for the shop. But I do not show Gov. any payment towards office or building for business. It depreciates the property. In my case it is worth it for me to just pay bills as homeowner.
I would suggest talking to your accountant!

Joined: Jan 2003
Posts: 1,429
L
LK Offline
Member
Yes when you file for home office expenses, horns blow, lights blink, and every has a big laugh at lunch that day, as they flag your return, and put you on the watch list, aleays seek a professional CPA before going the home office or shop route,

Last edited by LK; 04/22/08 10:34 AM.
Joined: Jul 2004
Posts: 9,923
Likes: 32
G
Member
That recaptured depreciation deal bites you when you do creative things like paying yourself rent (that you don't claim as income). If you just deduct a verifiable amount of the taxes, utilities and maintenance it is not depreciation and will not really bring undue scrutiny.


Greg Fretwell
Joined: Jan 2003
Posts: 1,429
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LK Offline
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Greg,

I like that, "when you do creative things"

IRS in not lookingf for the church lady and her small office, they are looking for the creative people and the those churning big bucks, out of a home office

Joined: Jul 2002
Posts: 717
M
Member
Originally Posted by LK
Just one intresting point, we just 2 of out local EC's retire, and talking to them the one thing they said was the best move they ever made was to buy a shop for the business, when they sold the business they had nice pay back on the investment, so now they can live out the retirement years less the worries of money.

One of the EC's bought a shop with 4 rental appartments, and the other EC bought 2 commercial office park buildings, they said it was easy to buy the commercial property with little money outlay, and the commercial buildings generated some fill in work at times.

We also have an EC that started buying small industrial buildings, today his company owns and operated over 20 major industrial parks


I would love to be able to do exactly that.... purchase my own building for my office and warehouse. But I live in Honolulu. So in order to buy a property that is zoned for business I just got to figure out how to cough up the one million needed for the down payment....

Joined: Jul 2004
Posts: 9,923
Likes: 32
G
Member
My wife owned a flower store many years ago before she decided "girl jobs suck". We "did creative things" with our taxes and when she sold the business for what we paid for it Uncle Sam came back at us and "recaptured" about $20,000 in depreciation. That is something to think about if you are depreciating a building that will eventually sell for a profit (or, like in our case, sell at exact cost).
When I asked the accountant, he said he expected us to lose money on the deal.


Greg Fretwell
Joined: Oct 2004
Posts: 39
F
Member
Originally Posted by Fred

My main supply house offered to set up to $30k of materials at my shop on consignment, meaning I only paid for what I drew from the on-site inventory at the end of the month.


I'd be interested in hearing more about this set up.


Thats how we do it up in the woods!
Joined: Sep 2003
Posts: 200
U
Member
Anyone bought or leased a commercial unit and built a small living space for themselves in it? (Zoning in my area allows an accessory dwelling unit.)

I'm just not sure if I can make the amount of space I can get (say 1000-1400sqft at $1/sqft/month) pay for itself. I'm just a one-man shop.

Joined: Jan 2005
Posts: 5,445
Likes: 2
Cat Servant
Member
I've just been put in an interesting situation. My long-term business partner has announced his desire to retire this year. Until now, he has handled the 'business' side of things. So, I have to get the license in my name, take over the bookkeeping, chase after work, etc.

Work out of my home? Not likely. There just isn't the room. Plus, as I've discussed in my earlier replies, there are solid reasons to have work in a separate location.

We've been using a 10x20 storage locker as our workshop. I am considering renting a second one, and making it into an office. Here's how that idea looks so far:
- Cost of converting a locker into a decent office would be about $1200. This would be mainly to insulate, light, and make a proper "man door" in the front. All such would be reversible, and most materials recoverable, should I decide to move out.
- Operating costs would be $65/ mo for the space, $30/mo for the electric, and $40-90 for phone and cable access. All completely deductible as business expenses.
- The space is almost exactly the bare minimum in which you can place a desk, computer, file cabinet, and drawing table.

A visit to a local surplus yard found a pretty decent, complete, basic Steelcase desk for $50. A 'water cooler' base (takes those 5 gal jugs, has hot and cold taps) was $25. A vertical blueprint cabinet was $120. Other items likely to turn up there would include the coat rack, the storage cabinet, the microwave / coffee cart, a lateral file, a 'merchandiser' mini-fridge, the 'hutch' or 'riser' over the desk, and necessary chairs.
This leaves - as far as furnishings go - the drafting table and the computer desk. I can - and have - built a computer station for about $100; a web search shows several basic drafting tables for under #200 - accessories included. I'll probably also have to make some sort of "drop slot" for folks to leave things like keys and papers.




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