Exclusive Room Question

[tenderhearts]

We did an addition to our home about 7 years ago, in the beginning it was the main room for daycare, used probably 95% of the time. My kids were younger well high school at the time so they would occasionally watch tv out here when they had a friend over but that was rare. Well now my kids are older and it is never used by anyone else in the family, pretty much when daycare is closed lights off and no one comes out here other than to occasioanly get something off the printer. The only other time we come out here is when we put wood on the wood stove, it is in the daycare room but it is used to heat the whole house. So my question is, can I use this room as an "exuclusive" room or not?

[TomCopeland]

exclusive use room

We did an addition to our home about 7 years ago, in the beginning it was the main room for daycare, used probably 95% of the time. My kids were younger well high school at the time so they would occasionally watch tv out here when they had a friend over but that was rare. Well now my kids are older and it is never used by anyone else in the family, pretty much when daycare is closed lights off and no one comes out here other than to occasioanly get something off the printer. The only other time we come out here is when we put wood on the wood stove, it is in the daycare room but it is used to heat the whole house. So my question is, can I use this room as an "exuclusive" room or not?

An exclusive use room is one that is never used for personal purposes. Except for the wood stove in this room, it is exclusive. So, measure off the square footage around the wood stove and call that a regular use room. The rest of the room is exclusive use. You've created two rooms for tax purposes. You don't need a wall to separate such rooms.

[tenderhearts]

Thank you! When you claim a room as exclusive it seems it poses a red flag with the IRS, is that accurate?

[TomCopeland]

exclusive use room

Thank you! When you claim a room as exclusive it seems it poses a red flag with the IRS, is that accurate?

Absolutely not. Take pictures of the room to show that it doesn't have personal items in it.

[tenderhearts]

So if someone goes out there to put wood on the fire they can't sit in the chair for a moment to get it to start before closing the door and leaving the room right? I wouldn't be able to use it as exclusive then? Not sure that has happened but I just want it to be legit.

Also a room can be used regularly if its used at least 3-4 days per week?

When measuring can we use our plans when we did the addition of the actual sq ft or do we have to measure inside wall to wall? Sorry hope these are ridiculous questions.

[TomCopeland]

So if someone goes out there to put wood on the fire they can't sit in the chair for a moment to get it to start before closing the door and leaving the room right? I wouldn't be able to use it as exclusive then? Not sure that has happened but I just want it to be legit.

Also a room can be used regularly if its used at least 3-4 days per week?

When measuring can we use our plans when we did the addition of the actual sq ft or do we have to measure inside wall to wall? Sorry hope these are ridiculous questions.

Since the fire is heating the house, it's not an exclusive space. But, you can still claim the rest of the room as exclusive use. Yes, a room used 2-3 times per week is considered regularly used. Measure inside wall to wall.

[tenderhearts]

thank you

[tenderhearts]

So now I'm concerned about my tax consultant. I spoke with her this morning about the exclusive room and she told me that I would not be able to do that because there would be no way to separate utilities and that it is a detached room that would be used for exclusive. I explained that I have information that says I can and that I should take pictures showing it is used exclusively for daycare (minus woodstove area) not personal. She said well you have a 32% tsp % and I said but using this room exclusively would raise this and she claims it wouldn't make a big difference. She said well if you want to try it we can but it will cost me more because of her time and she would need to use 2 separate forms for the regular business use and one for exclusive. I'm very concerned now.
I tried looking on your website for a tax accountant that specializes in it and it keeps coming up with an error. Not sure if it's my computer or the site.

[TomCopeland]

So now I'm concerned about my tax consultant. I spoke with her this morning about the exclusive room and she told me that I would not be able to do that because there would be no way to separate utilities and that it is a detached room that would be used for exclusive. I explained that I have information that says I can and that I should take pictures showing it is used exclusively for daycare (minus woodstove area) not personal. She said well you have a 32% tsp % and I said but using this room exclusively would raise this and she claims it wouldn't make a big difference. She said well if you want to try it we can but it will cost me more because of her time and she would need to use 2 separate forms for the regular business use and one for exclusive. I'm very concerned now.
I tried looking on your website for a tax accountant that specializes in it and it keeps coming up with an error. Not sure if it's my computer or the site.

Find a new tax preparer. Any increase in your time-space % will make a difference. The tax preparer is wrong to say she would need to use one form for regular use and one for exclusive use. The instructions to Form 8829 clearly state how to handle a situation where there is both an exclusive room and regular use room. You wouldn't be separating utilities, instead you would be using your higher time-space % on all your utility bills. I don't know why the tax preparer directory isn't working. Call me, and I can search the list for you: 651-280-5991

[tenderhearts]

Thank you, I really appreciate it. I finally was able to access the link on the Nafcc and there are only 2 in my area listed on there. I phoned one and he seemed very knowledgeable however he still really questioned using this space for exclusive use. I told him everything in here is related to childcare, it looks like a preschool room, very clear, he asked if there was a couch, I said yes, there is kid furniture and a full size love seat, he said if I was audited that they could say another or a guests children could come over and sit there and watch tv, well I can sit in the toddler chairs no problem. He also asked if there was a bed in the bedroom and I said yes a twin, he said same thing, a guest could come once a year and sleep in it, that's what the IRS could argue, he said he could do it but it may not be worth it since it may not make a big difference on my return $50 -$150.
I phoned the other tax preparer listed and she seemed to know the main stuff but no more than my own tax preparer, she said what my tax preparer said that should would do regular use of my home.
This is frustrating.
I wish I would have read your stuff earlier then I could have looked into all this way sooner. Thank you for all your help.

[TomCopeland]

exclusive use room

Thank you, I really appreciate it. I finally was able to access the link on the Nafcc and there are only 2 in my area listed on there. I phoned one and he seemed very knowledgeable however he still really questioned using this space for exclusive use. I told him everything in here is related to childcare, it looks like a preschool room, very clear, he asked if there was a couch, I said yes, there is kid furniture and a full size love seat, he said if I was audited that they could say another or a guests children could come over and sit there and watch tv, well I can sit in the toddler chairs no problem. He also asked if there was a bed in the bedroom and I said yes a twin, he said same thing, a guest could come once a year and sleep in it, that's what the IRS could argue, he said he could do it but it may not be worth it since it may not make a big difference on my return $50 -$150.
I phoned the other tax preparer listed and she seemed to know the main stuff but no more than my own tax preparer, she said what my tax preparer said that should would do regular use of my home.
This is frustrating.
I wish I would have read your stuff earlier then I could have looked into all this way sooner. Thank you for all your help.

This is frustrating. The IRS can argue all they want, but if you aren't using the room for personal purposes, you will win. I think he's giving you bad advice. However, I would guess that using an exclusive use room would get you more than $50-$150 in a refund. If you can't find anyone else, I'd still go with him.

[tenderhearts]

Thank you so much! I feel I know the tax side of everything fairly well to do on my own I just don't understand all the depreciation stuff : (