Tom - Moved Mid Year Claiming Both Properties?

[Zoe]

We moved from our old house in August and I'm confused as how to calculate my taxes (time space percentage etc). I was doing daycare (unlicensed) from January to May in the old house. Then once in the new house, I have been doing daycare (again unlicensed, though I'm in the process of becoming licensed) since September.

How does this affect my time space percentage? What about the depreciation of both houses? I'm not proud of this, but we had to walk away from our old house, so of course that's confusing as well, since there was no sale of the previous house. Anything else I need to pay attention to?

We have Tom's 2010 Tax Workbook and Organizer, but unclear as to how to proceed with the move aspect of our taxes.

Thanks!

[TomCopeland]

Two homes

Since you did child care in two homes you have to fill out two Form 8829s, one for each home. That means you calculate your time-space percentage for each home based on the hours you were in each home and allocate your home expenses to the two homes. My Tax Workbook explains how to do this. You can claim depreciation on both homes as well. Since you didn't have a profit on the sale of your first home you won't owe any tax on the gain. You will need to pay tax on the depreciation you claimed, or were entitled to claim on the old home. There's a chapter in the Tax Workbook about selling your home.

For all of this, I'm assuming that you were not in violation of state child care licensing laws for any part of the year. Let me know if this is not so.

[Zoe]

No, I didn't violate any laws. I've only ever watched one family at a time. When I started daycare in my old home, I was in the process of becoming licensed, but obviously didn't go through with it in that county as a result of the move. Nothing seedy!

Thanks!!!