Deducting Your Computer
Computers are considered “listed property,” or assets used for both business and personal applications.
Under the rules, if you use a computer more than 50% for business, you’re allowed to expense that percentage under Section 179 immediately or depreciate it using MACRS depreciation tables.
If you use the equipment less than half the time for business, you must depreciate it using a less-favorable depreciation system.
However, if you take a deduction for your home office, your computer no longer is considered listed property. (IRC Section 280F(d)(4)(B)). The equipment needs to be expensed without concern for listed property limitations.
The problem arises in that your home office computer now must be used 100% for business. If someone else uses it occasionally for Internet shopping and the kids play games on it, then your home office is being used for prohibited personal activities.
There are several ways to get around this dilemma:
- Purchase another inexpensive computer to use for nonbusiness purposes. That way, your 100% business computer won’t be subject to the listed property limitations and won‘t threaten you home office deduction.
- If you must use your computer for mixed business and personal reason, keep the equipment outside the home office. By doing this, your PC remains a listed property and your home office is used exclusively for business.